According to data from SunSirs, the domestic palm oil market continued to weaken and decline in early June. The average market price fell from 9,520 RMB/tonne on June 1 to 9,120 RMB/tonne on June 11, a drop of 4.2%.

Key factors influencing palm oil price movements:

Supply side: Malaysian inventories rose more than expected. MPOB data for May showed Malaysian palm oil stocks climbing to 2.428 million tonnes—a month-on-month increase of 5.15%—surpassing the market expectation of 2.36 million tonnes. High inventory levels have directly pressured prices. Domestically, supply is ample; significant arrival volumes are expected in June, and port inventories remain high.

Demand side: Export demand for Malaysian palm oil has shown signs of improvement. Although exports were sluggish in May, conditions improved in early June. Data from the independent inspection agency AmSpec indicates a 4.87% month-on-month increase in Malaysian palm oil exports for June 1–10. This recovery in demand has boosted market confidence. However, domestic demand remains lackluster; summer is traditionally a slow season for edible oil consumption, with terminal procurement driven primarily by immediate needs, placing pressure on spot prices and basis levels.

Pressure from substitutes: Supplies of substitutes such as soybean oil and rapeseed oil are also plentiful. Concentrated arrivals of Brazilian soybeans have led to a continued buildup of domestic soybean oil stocks, while price differentials have significantly diverted demand toward rapeseed oil; these factors indirectly limit the upside potential for palm oil prices.

In summary: As we head into late June, the fundamentals for domestic palm oil remain predominantly bearish, characterized by ample supply, sluggish demand, and a weakening market trend.

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