Malaysian crude palm oil futures settled around $1,101/MT (RM 4,498), down 0.3% from the previous session, as the market absorbed a mixed supply-demand picture. The global World Bank benchmark was near $1,105/MT, while Indonesia’s reference price stood at about $1,030/MT. Currency moves were muted, with the ringgit at 4.09 per dollar and the rupiah at 18,069 per dollar.
Supply: Peak Season and Rising Stocks
MPOB data for June 2026 showed Malaysian CPO production at 1,638,777 tonnes, up 8.1% month-on-month, in line with seasonal trends. Closing stocks rose 3.7% to 1,332,697 tonnes, while exports increased 5.7% to 1,198,567 tonnes. Notably, imports surged 135.3% to 103,113 tonnes, reflecting arbitrage opportunities from Indonesia. The FFB reference price slipped 1.3% to RM 48.90.
Weather remains a key watch point. The El Niño episode (ONI +1.0) has brought notably dry conditions to Kalimantan, raising concerns about future production in Indonesia. Our model outlook notes that while peak production is currently pressuring prices, El Niño dryness could tighten supply later in the year.
Demand: Mixed Signals from India and Biofuel
India, the world’s largest edible oil importer, saw a 30% drop in June imports, partly due to reduced palm and soybean shipments. However, reports suggest imports could surge from July to October ahead of festivals. India is also seeking sunflower oil alternatives amid Black Sea disruptions, which could support palm demand. Separately, Nepal’s duty-free edible oil exports to India are under scrutiny, potentially affecting trade flows.
Biofuel policy remains a wildcard. Indonesia’s B50 programme is expected to boost domestic palm consumption, but a sharp 6.9% slide in Brent crude over seven days to about $90/bbl has raised questions about biodiesel economics. The RBI has linked biofuel mandates to higher edible oil prices, adding to the policy debate.
Price Outlook: Mild Bearish Bias
Our model outlook suggests a mild bearish bias in the near term, with volatile daily moves. Pressures include the crude oil slump, peak production, and rupiah weakness. Support comes from the wide BOPO spread and El Niño dryness concerns. The market’s stale anchor and mixed demand signals keep confidence low.
What to Watch
Buyers should monitor crude oil price direction, any updates on India’s import policy, and weather developments in Kalimantan. Also watch for monthly export data and any shifts in Indonesia’s biodiesel mandate implementation.