Malaysian Palm Oil High Inventory Pressures

According to survey data, Palm Oil inventories in Malaysia are projected to climb to 3.75 million tonnes—a new all-time high—representing a 6.8% increase from the previous record of 3.51 million tonnes at the end of September. This growth is primarily driven by monthly production, which is also expected to reach a new historical peak. As a major global producer of palm oil, Malaysia’s record-high levels of both production and inventory indicate a degree of supply-side abundance that exceeds market expectations; this is likely to exert continued downward pressure on both spot and futures prices for palm oil.

Palm oil serves as a core raw material for the oleochemical industry. A decline in the cost of this feedstock will drive down production costs for downstream chemical products. In the short term, prices for items such as stearic acid, palmitic acid, oleic acid, fatty alcohols, glycerin, fatty acid methyl esters (FAME), soap noodles/soap bases, surfactants, PVC epoxy plasticizers, and emulsifiers used in personal care and household products are highly likely to follow a downward trend.