Malaysia palm oil slips as crude oil losses and export slowdown collide

Palm oil prices extended their decline for a second session, slipping to the lowest level in two weeks as weakness in crude oil markets coincided with softer export data from Malaysia.

The move reflects a broader reassessment across energy and vegetable oil markets as traders respond to falling fuel prices, slowing shipments, and pressure from rival oils.

Futures fell below 4,000 ringgit a ton on Friday, a level closely watched by the market.

Crude oil weighs on pricing

The slide in palm oil followed renewed weakness in crude oil, which ended the year with its steepest annual loss since 2020.

Markets have been grappling with a combination of rising global supplies and persistent geopolitical risks, both of which have capped price recovery.

West Texas Intermediate crude fell 0.9% on Wednesday to settle at $57.42, completing a 20% decline for 2025.

Lower oil prices tend to reduce demand for biodiesel feedstocks, including palm oil, weakening one of the commodity’s key sources of support.

This pressure was also evident across the wider vegetable oil complex.

Soybean oil, palm oil’s closest rival in both food and fuel markets, closed 1.8% lower on Wednesday, reinforcing the negative tone and limiting substitution-driven demand.

Export data adds pressure

In addition to energy market weakness, export figures from Malaysia weighed on sentiment.

Shipments from the world’s second-largest palm oil producer fell 5% month on month in December to 1.2 million tons, according to data from AmSpec.

The weaker shipment data amplified the impact of falling crude prices, pushing palm oil futures further below recent trading ranges.

The softer export performance suggested near-term demand remained subdued, despite seasonal factors that often support consumption toward the end of the year.

The latest figures suggest demand has not yet picked up meaningfully at the end of the year.

Prices of related contracts in Asia reflected the cautious mood.

Refined palm oil for May delivery on China’s Dalian Commodity Exchange declined 0.9% to 8,584 yuan a ton, while soybean oil for May was little changed at 7,862 yuan a ton.

Seasonal demand ahead

Despite the recent losses, attention is beginning to shift toward potential buying interest linked to upcoming festivals.

Demand ahead of the Lunar New Year and Ramadan in February 2026 is expected to support consumption, particularly if prices remain below the 4,000 ringgit a ton threshold.

At these levels, the market is seen as attractive for bargain-buying, which could help stabilise prices after the recent slide.

Seasonal restocking typically increases purchases across major importing regions, offering some relief from current headwinds.

For now, palm oil remains caught between falling energy prices and weaker exports on one side, and expectations of festival-driven demand on the other.

Price direction in the near term is likely to continue tracking crude oil movements and export flows from Malaysia.