Crude Palm Oil (CPO) futures trading on the Bursa Malaysia Derivatives concluded 2025 and began 2026 under downward pressure, primarily influenced by softening near-term demand indicators and routine profit-taking by market participants. The benchmark March 2026 CPO contract closed the final trading day of 2025, Wednesday, December 31, 2025, at RM3,998 per tonne. This set the stage for further weakness, as Malaysian palm oil futures slipped approximately 1% by the first trading day of 2026, January 2, 2026, hovering near the MYR 4,000 per tonne level, with one report noting a 1.19% decline to MYR 4,002/T.
This immediate bearish sentiment contrasts with underlying expectations for a price resurgence tied to significant seasonal consumption spikes. The late-2025 weakness followed a December rally initially supported by robust import volumes from India, which increased its purchases by 66% in the first 25 days of the month compared to the preceding month. However, the subsequent decline is attributed to a tangible slowdown in export activity; Malaysian exports fell by 5% in December 2025, totaling 1.2 million tons according to AmSpec data, while cargo surveyors noted a 5.2%–5.8% drop for December 1–25 versus November.
This contraction in exports, coupled with a strengthening Malaysian ringgit—which approached a four-and-a-half-year high—made Malaysian palm oil comparatively more expensive for international buyers, dampening the immediate demand outlook. Macroeconomic factors are also exerting downward pressure on CPO valuations. Declining crude oil prices, a key input for biodiesel, have undercut palm oil’s value proposition in the energy sector. On January 2, 2026, WTI crude settled near $57.42 per barrel after recording its steepest annual loss since 2020, while Brent crude traded around $61 a barrel, often correlating with softer sentiment across vegetable oils.
Despite these immediate headwinds, a medium-term bullish case is being constructed around festival demand, which is anticipated to bolster prices above the RM 4,000 per ton threshold by February 2026. Gnanasekar Thiagarajan, Head of Trading and Hedging Strategies at Kaleesuwari Intercontinental, indicated that strong consumption ahead of the Lunar New Year and Ramadan, which are set to coincide in February 2026, should drive buoyant prices. This seasonal buying pattern historically prompts stock replenishment by major importers like India, which is currently operating with vegetable oil stocks significantly below year-ago levels.
Looking toward the broader supply landscape for 2026, the Malaysian Palm Oil Council (MPOC) projects a stabilization of the market. MPOC forecasts Malaysia's 2026 production to ease to 19.7 million tonnes as oil palm trees enter a natural dormancy phase following a strong 2025 performance, while exports are projected to rise to 16.2 million tonnes. This projected supply-demand equilibrium suggests that while near-term selling pressure exists, the fundamental structure for the year ahead is viewed as healthier, provided the strengthening ringgit does not negate the expected festival-driven support. Technical analysts identify immediate support for CPO prices near the RM 4,000 level, with overhead resistance positioned around RM 4,150 per tonne.
