Palm Oil Rally Pauses, Despite Weekly Gain of Over 1%

Global benchmark crude palm oil (CPO) prices weakened slightly during trading on Friday (18/09/2026) at the end of the week, following a decline in competing vegetable oil prices on the Dalian and Chicago exchanges, as well as a drop in crude oil prices, though they still recorded a weekly gain.

According to data from Refinitiv, the Malaysian benchmark CPO for the December 2026 contract closed down 0.77% at RM 4,898 per tonne on Friday. However, throughout this week, CPO prices surged by 1.74% on a point-to-point basis.

“Malaysian CPO futures remained in negative territory on Friday, reflecting selling pressure across the commodities sector during Asian trading hours,” said a Kuala Lumpur-based trader, as quoted by Reuters on Sunday (20/09/2026).

The most active soybean oil contracts in Dalian fell by 1.56%, while its palm oil contracts slumped by 1.64%. Meanwhile, soybean oil prices on the Chicago Board of Trade (CBoT) corrected by 0.74%.

Palm oil prices move in tandem with competing vegetable oils as they compete for global vegetable oil market share.

Market participants are closely monitoring official announcements from the Indian government regarding potential reductions in import tariffs, which could impact demand for Malaysian palm oil.

On the other hand, global crude oil prices weakened for three consecutive days as easing concerns regarding supply disruptions from Saudi Arabia offset anxieties over the expansion of Middle East conflicts amidst new fighting between Saudi Arabia and the Houthi group in Yemen.

Lower crude oil futures make palm oil a less attractive option as a feedstock for biodiesel.

Palm oil production in Kalimantan, a major producing region in Indonesia, could decrease by as much as 12% to 15% in the fourth quarter of 2026 due to plantations being affected by prolonged dry weather and widespread land fires.