China, the world's second-largest palm oil importer, remains a steady buyer even as global supply dynamics shift. The latest Malaysian data for July 2026 shows exports rising 14.5% month-on-month to 1.39 million tonnes, a sign that key Asian destinations, including China, are absorbing shipments ahead of seasonal demand peaks. Port inventories in China are reportedly sufficient for near-term needs, but traders note that restocking ahead of major festivals typically supports import flows into the fourth quarter.

Price and Spread Dynamics

Benchmark Malaysian crude palm oil (CPO) settled around $1,158 per tonne, up 1.2% on the session, while the global World Bank benchmark sits near $1,101. The wide spread between palm and soybean oil remains a key factor for Chinese refiners, who often switch between the two based on relative value. With soybean oil futures on the Dalian exchange under their own supply pressures, palm's discount keeps it attractive in food and industrial applications. That spread is expected to underpin import demand even if outright prices pull back.

Currency and Duty Factors

The ringgit's level near 4.04 per dollar influences the landed cost of Malaysian palm for Chinese buyers. A softer ringgit makes Malaysian product more competitive versus Indonesian offers, though Indonesia's export levies and duties remain elevated, narrowing the gap. China's own import duty regime for palm oil is stable, with no new policy signals in the recent headlines. Macro demand signals, including food service and processed food output, remain moderate, consistent with a cautious but not contracting import appetite.

Seasonal and Weather Backdrop

El Niño conditions (ONI +1.4) have brought dry weather to parts of Sarawak and Kalimantan, raising concerns about future production in Indonesia and parts of Malaysia. However, July MPOB data shows Malaysian CPO production rose 9.4% month-on-month, and closing stocks increased 7.2% to 1.43 million tonnes. Peak production season is underway, which could ease supply tightness in the near term. For China, this means ample availability for spot purchases, but weather risks into 2027 could prompt buyers to secure forward coverage.

Outlook

Our model outlook suggests CPO has risen 4.6% over seven days and sits near the top of its 52-week range, with overbought signals (RSI 78, price above the upper Bollinger Band). We expect consolidation over the next seven sessions, with a modest pullback as profit-taking emerges. For China, that would offer a more attractive entry point for restocking. The key watch items are Dalian soybean oil futures, port inventory levels, and any policy moves on vegetable oil imports. China's demand is likely to remain resilient, driven by competitive pricing relative to soy oil and steady food-sector consumption.