International Palm Oil

1. Malaysian Palm Oil: November Inventories Continue to Rise, Real Supply-Demand Pressure Remains Significant

Production: November typically marks the onset of the rainy season in Southeast Asia. During the first half of November, Malaysia experienced below-average rainfall. MPOA estimates Malaysian palm oil production from November 1-20 increased by 3.24% month-on-month. Historically, Malaysian palm oil production rarely shows month-on-month growth in November. During the latter half of November, typhoons brought over a week of torrential rains and flooding to Indonesia and Malaysia, increasing rainfall anomalies in these regions. This may result in a slight month-on-month decrease in Malaysian palm oil production for November.

Exports: Malaysian palm oil exports exceeded expectations in October, reaching 1.69 million tons—a historically high level for the period and significantly surpassing shipping agency forecasts. Shipping agency data as of November 30 indicates a 19.7% month-on-month decline in export shipments of Malaysian palm oil and its products. Malaysian palm oil exports for November are expected to be weaker month-on-month, potentially reaching the historical average for the same period.

Additionally, Indonesia's palm oil export tax will be reduced in December. The duty on crude palm oil will decrease from $124/ton in November to $74/ton, while the levy on crude palm oil will be reduced by 10% in tandem. Recent reports indicate Indonesian suppliers have postponed shipments of at least 310,000 tons of palm oil from November to December, accounting for approximately 12% of monthly exports. Consequently, Malaysian palm oil exports are expected to remain weak in December.

Inventories: Malaysian palm oil inventories rose to 2.46 million tons in October, remaining at historically elevated levels for this period. Based on current export estimates, inventories are projected to increase further in November, potentially reaching 2.60-2.70 million tons, with the key focus being the month-on-month decline in production. Malaysian palm oil continues to face significant supply-demand pressures. December exports are likely to remain weak, making a substantial inventory draw unlikely.

Medium-term outlook: As rainfall increases, Malaysian palm oil inventories will gradually decline from current highs. However, stocks are expected to remain above 2 million tons until March 2026, preventing a tightening of the medium-term supply-demand balance.

2. Indonesian Palm Oil: September Output Declines; Focus on Sustainability of Lower Production

Data from the Indonesian Palm Oil Association (GAPKI) shows Indonesia's crude palm oil production in September reached 3.932 million tons, a significant 22.32% decrease from the previous month's 5.062 million tons. Indonesia's total crude palm oil and palm kernel oil production from January to September 2025 reached 43.335 million tons, marking an approximately 11.3% year-on-year increase. While some industry players remain skeptical about the September production figures, if confirmed, this could indicate that the impact of Indonesia's confiscation of illegal plantations on production is beginning to materialize.

Indonesia's palm oil exports in September totaled 2.2 million tons, a substantial decrease of 36.65% from August's 3.473 million tons. By major destination, exports to China fell by 212,000 tons, to Malaysia by 144,000 tons, to Africa by 143,000 tons, and to Indonesia itself by 409,000 tons.

Domestic palm oil consumption in Indonesia reached 2.053 million tons in September, slightly down from August's 2.10 million tons. Within this, biodiesel industry consumption fell from 1.111 million tons in August to 1.07 million tons, a month-on-month decrease of 3.69%.

With both supply and demand significantly reduced in September, Indonesia's palm oil inventory stood at 2.592 million tons by the end of the month, up 1.9% from 2.543 million tons a month earlier. Inventories remain stable at low levels.

International palm oil prices experienced a sharp decline starting in late October, with market expectations that Indonesia's palm oil export tax would be correspondingly reduced in December. Current indications suggest Indonesia has indeed lowered the tariff as expected. The December reference price for Indonesian crude palm oil stands at $926.14 per ton, down from November's $963.75 per ton. The total export tax for Indonesian crude palm oil in December decreased by approximately $54 per ton compared to the previous month.

The calculation period for December's crude palm oil tariff reference price spans October 20 to November 19. Prior to the tariff announcement, external markets had already been pricing in expectations of a December reduction. Due to shipment delays, Indonesia's palm oil exports in November will be relatively weak, while December exports are expected to improve.

China Domestic Palm Oil: Focus on December Shipment Procurement; Domestic Demand Remains Essential

Imports: Domestic procurement of December-shipment palm oil remains low, with continued attention on vessel purchase progress. Given poor import margins, if December procurement falls below 200,000 tons, domestic palm oil inventories are expected to decline in the near to medium term.

Domestic palm oil demand remains fundamentally driven by essential needs. As of November 21, national commercial palm oil inventories stood at 667,100 metric tons. Current stock levels are slightly above neutral, indicating a moderately relaxed domestic supply-demand balance.

In the near to medium term, if December shipment purchases remain low, coupled with the food industry's Spring Festival stockpiling demand, domestic inventories are projected to experience a significant decline.

As an integrated internet platform providing benchmark prices, on December 4, the benchmark price of palm oil on SunSirs was 8,802.00 RMB/ton, an increase of 3.33% compared with the beginning of the month (8,518.00 RMB /ton).

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