December cargo surveyor estimates confirming Malaysian palm oil shipments fell another 10-15% in the first ten days of the month suggest what market players characterize as evidence that November’s export collapse was not an isolated event. Industry insiders told Expana that December 1-10 shipments dropped to approximately 390,000-396,000 tonnes from 442,000-459,000 tonnes in early November, extending the deterioration that official Malaysian Palm Oil Board data revealed with November’s 28.13% monthly decline that left exports at 1.21 million tonnes while end-month stocks surged 13.04% to 2.84 million tonnes.
Sources said the continuation into December represents what they characterize as structural rather than cyclical changes, with traders noting this decline occurs during what should typically be stronger seasonal export periods. Market participants told Expana that stocks reaching 2.84 million tonnes – the highest level in around six years – combined with Malaysian annual output on track to exceed 20 million tonnes for the first time in 2025 demonstrates what they describe as demand destruction that seasonal production adjustments cannot meaningfully address.
Official data from India’s Solvent Extractors Association reveals what sources characterize as active substitution toward alternative oils. While November 2025 palm oil imports showed a month-on-month increase to 630,491 mt, industry insiders noted the year-on-year comparison declined over 200,000 mt from 832,725 mt in November 2024, coinciding with soybean oil imports surging to 5.468 million mt in the Nov’24-Oct’25 period compared to 3.440 million mt in the previous year.
Traders said this substitution pattern reflects Indian buyers’ increasing price sensitivity and willingness to diversify supply sources, with cumulative palm imports through the 2024-25 marketing year totaling just 7.58 million mt compared to 9.02 million mt in the same period of 2023-24. Sources noted that while November’s month-on-month uptick typically provides price support, the tactical nature of this buying – occurring during price weakness rather than representing sustained volume commitment – highlights what market players describe as Indian buyers’ opportunistic approach that limits ability to meaningfully absorb Southeast Asian surplus supplies.
Industry insiders noted that delays to Indonesia’s B50 biodiesel mandate implementation from early 2026 to the second half of 2026 could redirect an estimated 3 million mt of annual domestic Indonesian palm oil demand back into export channels. Market participants told Expana this timing coincides with Malaysia’s existing inventory accumulation, as Indonesian competition for the same export destinations would pressure suppliers already navigating what sources describe as selective international buyers who have demonstrated willingness to substitute toward alternative oils when palm prices fail to offer sufficient discounts.
Sources said the combination of continued December shipping weakness, elevated inventory levels, reduced Indian import commitment despite tactical purchasing, and potential Indonesian supply redirection creates conditions where traditional demand outlets remain constrained while supply pressures intensify, leaving Malaysian suppliers to navigate what market players describe as an environment where buyers maintain price sensitivity and regional competition may intensify as demand recovery appears increasingly elusive.
Image source: Getty
Written by Kyle Holland
