After a few weeks of continuous price increases, the prices of US Palm Oil imports drop by 0.9% in the third week of December, thus indicating a change in market trends over the past few weeks. The decrease in prices is attributed to the fall in global Palm Oil benchmarks due to rising production levels in Southeast Asia and pressure from other vegetable oils such as soybean oil and sunflower oil. Despite continuous demand in the US market, the prices drop due to expected sufficient supplies in the global market. Seasonal factors that contributed to higher costs in the past, such as holiday period buying, are now less relevant. Analysts also point out that low import demand in key markets such as India is another factor that has pushed prices lower. Although strong structural demand in the US continues, the current short-term trend is also a result of overall market adjustments and rising palm oil commodity price volatility. If global supply continues to outstrip demand and substitutes continue to offer attractive prices, import values could see further drops in the weeks ahead.
After a consistent trend of increase on a weekly basis, which highlighted the energy and agricultural commodity price sensitivity to the global supply-demand framework, the import price of Palm Oil in the US market shows a decrease in the third week of December, falling by 0.88% from the previous week. This small turn-around is set against the general trend of weakening global Palm Oil market prices, where prices have generally eased in recent months due to the effects of rising global production and competition from other vegetable oils such as soybean oil and sunflower oil. At the Bursa Malaysia exchange as of early December, global Palm Oil prices are slightly lower compared to last month and are significantly lower compared to earlier in the year.
The prices of US Palm Oil imports have been swept up in this broader trend, despite refiners and food processors continuing to purchase tropical oil supplies to satisfy steady demand from the food manufacturing, industrial, and biodiesel feedstock sectors. During the past year, the import prices of Palm Oil into the US had actually remained robust when measured against various global price indicators. This has been due in large part to the fact that the Palm Oil refined variety represents the predominant import type for the US, with refined prices invariably being above or near global averages.
The latest weekly drop in Palm Oil comes after a few weeks of steadily rising import prices, which were primarily attributed to seasonal purchases prior to the holiday season and tightness that contributed to push the freight and landed costs up. Nevertheless, the current easing seems to indicate that market dynamics are shifting as buyers seem to exert pressure due to expected ample levels of global Palm Oil inventories along with the influence of rival edible oils.
Analysts point out that the world’s largest Palm Oil importer, India, has witnessed periods of low import levels this year as refiners have switched to less expensive options when price spreads widen.
Adding to the price change, world vegetable oil including Palm Oil markets overall have weakened due to increasing production in the region of Southeast Asia, as well as favorable growing conditions, particularly in Malaysia and Indonesia, which collectively account for the majority of global Palm Oil exports. Such conditions have contributed to decreased market values, despite challenges in export markets due to varying demand from major customers within Asia and Europe.
The current trend in Palm Oil import prices in the US market is also consistent with the overall trend indicated by commodity data platforms, which indicate that Palm Oil prices are down by almost 16% over the last year and are trending slightly lower over the past month as traders adjust expectations for the first quarter of 2026. Even as biodiesel demand in the major economies, including the US, is expected to drive vegetable oil demand in the medium term, the current pricing environment is expected to remain challenged by sufficiently abundant palm oil supplies.
Traders highlight the current market Palm Oil price action must be considered in the context of overall high volatility in the commodity markets, where geopolitical factors, exchange rate movements, and infrastructure constraints are sufficiently dynamic to reshape perceived risk factors and expense bases. However, the fact that the current Palm Oil price action represents a week-on-week decline is a respite from the previous positive trend and indicates that buyers are readjusting their plans based on palm oil supply changes.
