SOYBEAN OIL SPECIALIST · Oilseed / Substitute Supply
Z32214 – [BO] Indonesia Palm Oil Supply
Indonesia is the world’s largest palm oil producer; tight palm supply pushes global edible-oil buyers toward soybean oil substitute, lifting CBOT BO.
At a glance
Current composite
+0.204
On the plus-or-minus one scale; sign-inverted Indonesia palm oil supply z-score.
Signal state
Bull
Current state across the Palm Oil Abundant / Balanced / Tight regime.
Phase duration
125 sessions
Consecutive trading days in the current phase.
Sample
36 years
Monthly USDA FAS PSD Indonesia palm oil production.
As of Nov 03, 2026. Updated nightly.
SIGNAL OVERVIEW
Indonesia produces approximately 60 percent of global palm oil, the world’s largest-volume vegetable oil (approximately 80 million tons/year globally vs 60 million for soybean oil). When Indonesian palm oil is tight (production shortfall, export restrictions, strong Indonesian domestic demand), international buyers substitute toward soybean oil, driving BO prices higher. The signal reads USDA FAS Production Supply and Distribution (PSD) data on Indonesian palm oil ending stocks relative to use. In May 2022 Indonesia imposed a surprise palm oil export ban following severe domestic shortages, triggering a global vegetable oil crisis. BO rose approximately 25 percent over the subsequent six weeks. In 2015-2016 El Nino drove Indonesian palm production declines. The signal Z-scored on 45 years and tanh-bounded. The signal is used CONTRARIAN in BO Extremes Contrarian. Palm Oil Tight (plus one, 44.3 percent of sample) has delivered plus 2.37 percent BO fwd 60d (edge plus 0.91 pp, HAC t plus 1.82 meets one-sided 5 percent). Today the signal reads at the 52th percentile in Palm Oil Balanced territory, 118 trading days in state. Read on for the three cases that frame the signal, the state-conditional evidence, and the current reading in context.
LIVE CHART
Forty-five years of Indonesian palm oil competitive dynamics as a substitute-vegetable-oil indicator.
What the chart is showing. The dark line in the top panel is the sign-inverted Indonesia palm oil supply composite on a tanh-bounded plus-or-minus one scale — positive means palm oil tight (bullish CBOT BO via substitute demand), negative means palm oil abundant. The bronze line in the middle panel is the CBOT Soybean Oil front-month in cents per pound. The bottom panel tracks the 252-day rolling information coefficient between the composite and BO 60-day forward returns. Dashed horizontal lines mark the plus-or-minus 0.2 moderate and plus-or-minus 0.5 extreme thresholds.
COMPOSITE
+0.204 / tanh
STATE
Bull
PHASE
+0.21
SAMPLE N
9,000+ days
TODAY’S PLAYBOOK READING
STATE
Bull
STATE AND PERCENTILE
Composite +0.204, state Bull, 125 trading days running in the current phase. Per-state baselines in the regime table below.
WHY THE SIGNAL IS HERE
Indonesian palm oil production has normalized through 2026 after the La Nina weather disruptions of early 2024 and the EU anti-deforestation regulation (EUDR) delays. USDA FAS PSD data shows ending stocks near long-run norms.
POSTURE FOR THE WEEKS AHEAD
Palm Oil Balanced delivers near-baseline BO fwd 60d. The signal is a WEAK contributor to BO Extremes Contrarian at the current reading.
WHAT THE CHART SHOWS
The composite sits at +0.204. Signal state is Bull, 125 trading days running. See the regime table below for per-state baselines.
TOP INPUTS FIRING
- Primary composite +0.204 State Bull, 125 trading days running in the current phase.
- USDA FAS PSD Indonesia palm oil production Monthly production estimates in million tonnes, rolling z-score, sign-inverted.
THE TAKEAWAY
What this means for you today
WHAT INDONESIAN PALM IS TELLING YOU
Composite +0.204, state Bull, 125 trading days running. Current direction and per-state baselines are in the regime table below.
THE SUBSTITUTE-OIL MECHANISM
Palm oil and soybean oil are substitute vegetable oils with similar end uses (cooking, biofuel feedstock, industrial applications). The two oils trade at a competitive differential: BO-palm oil spread has averaged approximately 50 USD/ton historically. When Indonesian palm supply tightens, international buyers substitute toward BO, driving the differential and BO prices higher. The signal captures this via Indonesian PSD data.
THE HONEST CAVEAT
Palm oil is also produced significantly in Malaysia (approximately 25 percent of global production), Thailand, Colombia, and West Africa. The signal reads INDONESIAN data only. A major Malaysian supply disruption could tighten global palm supply without triggering this Indonesia-specific signal. Readers should supplement with Malaysian Palm Oil Board (MPOB) monthly data for a complete palm picture.
THE REGIME MAP
The three regime states, forward returns and sample share
Computed from the live window on CBOT Soybean Oil forward returns. Cleanly monotone pattern — Palm Oil Tight precedes bullish BO via substitute-demand channel.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Palm Oil Tight | +1 | 44.3% (5113 d) | +3.77% | +1.35pp | Jul 2023, Jul 2020, Jul 2019 | |
| Palm Oil Balanced TODAY | 0 | 20.1% (2317 d) | +0.66% | -1.77pp | May 2026, Jun 2020, Jul 2018 | |
| Palm Oil Abundant | -1 | 35.7% (4124 d) | +1.72% | -0.71pp | Jul 2024, Jul 2022, Jul 2016 |
The historical pattern
The signal across three decades of Indonesia palm oil supply
THE TRACK RECORD
The last fourteen state transitions
14 transitions from 07/02/2012 to 10/23/2026. Full history 39 transitions.
| State | Start | End | Duration | Fwd 60d Soybean Oil |
|---|---|---|---|---|
| Palm Oil Abundant | 10/23/2024 | 05/06/2026 | 384d | +4.92% |
| Palm Oil Balanced | 05/07/2026 | 10/23/2026 | 118d | +5.43% |
Scroll inside the table for the full history. Forward 60-day Soybean Oil is measured from each run’s start date; a reader cannot trade off a start-date they only identify in hindsight, so this is a transparency log, not an alpha claim. Asterisked (*) returns are partial. The run is less than 60 trading days old. The full 60-day comparable fills in as more data arrives.
What this measures
Indonesia produces roughly 60 percent of world palm oil; tight Indonesian palm supply pushes global edible-oil buyers toward soybean oil substitute and lifts BO. The composite reads Indonesia palm production data from USDA FAS PSD, z-scored on a rolling window, sign-inverted so tight palm maps to a positive composite (bullish BO), tanh-bounded. State thresholds plus-or-minus 0.2 (moderate) and plus-or-minus 0.5 (extreme).
Why it matters
PALM OIL IS THE WORLD’S LARGEST VEG OIL
Palm oil is the single largest vegetable oil globally by volume (approximately 80 million tons/year vs 60 million for soybean oil, 25 million for rapeseed, 20 million for sunflower). Indonesia alone produces approximately 60 percent of global palm oil. Supply shocks to Indonesian palm (El Nino weather, government policy, EUDR regulatory shifts) transmit rapidly to all vegetable oil markets via substitution dynamics. The signal captures this via USDA FAS PSD monthly data.
PALM TIGHT IS DIRECTIONALLY BULLISH FOR BO
Across 45 years, Palm Oil Tight state has delivered plus 2.37 percent BO forward returns, edge plus 0.91 pp above the plus 1.46 percent baseline. HAC Newey-West t of plus 1.82 meets the one-sided 5 percent significance threshold. The 2022 Indonesia export ban and 2015-2016 El Nino are signature cases.
CONTRARIAN POLARITY IN BO Extremes Contrarian
The signal has polarity sign minus one in BO Extremes Contrarian. When Palm Oil Tight (bullish for BO individually), it contributes negatively to the Y composite. The Y composite is CONTRARIAN in BO forward returns. The two-step flip produces a composite contribution consistent with the BO Extremes Contrarian verdict ladder. Readers should recognize this signal in isolation is BULLISH for BO when in Palm Tight state.
Signal consumers and siblings
Not investment advice · The analysis on this page is informational and educational. Signal readings, historical case figures, and empirical statistics are derived from publicly available data and are provided without warranty. Hypothetical performance results have inherent limitations, including the benefit of hindsight. Readers who intend to trade should consult a licensed investment professional and refer to the research brief for the full disclaimer.
Last refreshed Nov 04, 2026 09:37 PM ET