Where the price sits now Palm oil prices were little changed on Wednesday, with the Malaysian crude palm oil (CPO) benchmark steady at about $1,100/MT (RM 4,506/MT). The market paused after digesting a 12.6% plunge in Brent crude over the past week, which now sits at $79/bbl. Trading volumes were thin as participants awaited the upcoming Malaysian Palm Oil Board (MPOB) data release.
What is pushing prices UP India’s import surge – India’s edible oil imports hit a 10-month high in July, driven by a sharp increase in palm oil purchases. This near-term demand spike absorbs regional supply and provides immediate price support, as Indian buyers actively secure cargoes ahead of festivals.
B50 biodiesel mandate – Indonesia’s nationwide B50 distribution, launched on 27 July, is set to absorb an estimated 3–4 million tonnes of palm oil annually. While the impact is structural and long term, it underpins sentiment by eroding available stocks for export and highlighting policy-driven demand growth.
Attractive soyoil spread – The soybean oil–palm oil (BOPO) discount has widened to $481/MT, making CPO a compelling alternative for price-sensitive buyers. This demand-switching incentive cushions the downside, as refiners in price-sensitive markets (e.g., India, Bangladesh) substitute soyoil with palm oil whenever possible.
El Niño anticipation – An El Niño event (ONI +1.0°C) is developing, which historically cuts Southeast Asian palm yields with a 6–12 month lag. While not a near-term price mover, it fosters a medium-term bullish bias by threatening future supply, limiting aggressive selling by long-term holders.
What is pushing prices DOWN Indonesian rupiah weakness – The rupiah slipped to 18,036 per USD amid China PMI concerns, incentivising aggressive export selling. A weaker local currency boosts the competitiveness of Indonesian palm oil in dollar-denominated markets, increasing the flow of cheap supply and pressuring regional benchmarks.
Upcoming MPOB data – With the July stock report due in about six days, the market braces for a likely inventory build during the peak production season. Positioning ahead of the release is cautious, as a higher-than-expected stocks figure would confirm ample supply, triggering further downside.
Brent crude oil plunge – The 12.6% weekly drop in Brent to $79/bbl significantly deteriorates biodiesel blending economics. Lower crude prices reduce the margins for discretionary biodiesel production, cutting CPO’s attractiveness as a feedstock and easing demand from the energy sector.
Technical weakness – The 5/20 SMA death cross and price trading below all major short-term moving averages point to a developing downtrend. With the RSI at a neutral 47 but momentum eroding, chart-driven traders are likely to favour short positions, adding selling pressure.
Crowded speculative positioning – CFTC data shows soybean oil net longs remain in the 85th percentile, despite a 15,000-contract reduction. This crowded positioning leaves the complex vulnerable to long liquidation if bearish catalysts intensify, amplifying downward price moves.
Seasonal peak production – The July–October period historically sees the highest palm output in Malaysia and Indonesia. Dry weather in key growing regions (Sabah, Sarawak, Kalimantan) currently favours harvesting, accelerating the seasonal supply surge and weighing on prices.