Palm Oil Market Softens as Malaysian Stocks Rise and India Eyes Edible-Oil Duty Cuts

Palm oil markets have taken on a softer tone as a combination of rising Malaysian inventories and potential Indian policy changes weighs on price sentiment, according to a September 21 market analysis published by CMB News.

Malaysia's official August palm oil data showed total stocks rising approximately 7.48% month-on-month to around 2.82 million tonnes, as output increased modestly while exports declined. According to CMB News, exports fell by about 7.5% compared with July, pushing ending stocks higher and loosening the supply-and-demand balance sheet. Crude palm oil (CPO) inventories rose even faster than the headline figure, the report noted.

CMB News described international palm oil fundamentals as "less supportive", characterising the market as shifting from tightness toward balance or slight oversupply. Malaysian benchmark CPO futures have been trading in what the report called a "choppy but generally heavy range", reflecting pressure from rising inventories and softer export demand.

A secondary but potentially significant driver is speculation that India may reduce import duties on edible oils. CMB News said such a move would likely increase inflows of palm and other vegetable oils, capping domestic price strength for mustard and other oilseeds and encouraging refiners to lean more heavily on imports. The analysis noted that Indian mustard prices in Jaipur are "broadly stable", with conditioned mustard quoted near the equivalent of about $89.43 per quintal, reflecting what CMB News characterised as a cautious domestic demand environment.

On the production outlook, CMB News reported that seasonal climate conditions in Southeast Asia point to "generally near-normal to slightly wetter conditions" in parts of the main palm-growing belt, which the source said should be broadly supportive of fresh fruit bunch yields rather than triggering immediate supply stress. Malaysian 2025/26 palm oil output was described as already rebounding from prior weather disruptions, with August production tracking close to its five-year average for the month.

CMB News assessed the near-term market bias as "mildly bearish to sideways", noting that higher Malaysian stocks and softer exports outweigh isolated demand upticks. The analysis stated that any rallies are "likely capped" by high August stocks and a lack of fresh demand shocks, while Indian policy headlines on edible-oil import duties were identified as the key variable to watch for cross-commodity direction.

For the feed and oilseed processing sectors, the widening of Malaysian palm oil availability and potential easing of Indian import levies could alter competitive dynamics between palm oil and domestic oilseeds such as mustard and soy in Asian crush markets, affecting ingredient sourcing costs and blend economics for feed manufacturers reliant on vegetable oils and oilseed meals.