Price action

The Malaysian crude palm oil (CPO) benchmark settled the week at approximately $1,104 per metric ton, or RM 4,515, down 0.3% from the previous session. The global World Bank benchmark stood at about $1,101/MT, while Indonesia's reference price was set near $1,030/MT. Prices have held in a narrow band, with the market digesting a fresh round of supply data and awaiting the next official inventory read.

Energy and currencies

Brent crude traded at roughly $82 per barrel, flat on the session, keeping biodiesel blend economics broadly unchanged. The ringgit was quoted near 4.09 per dollar, while the rupiah hovered around 17,941 per dollar. Currency moves were modest, offering little directional impetus for exporters or importers.

MPOB June data

The Malaysian Palm Oil Board's June release showed CPO production at 1,638,777 tonnes, up 8.1% month-on-month, while closing stocks rose 3.7% to 1,332,697 tonnes. Exports increased 5.7% to 1,198,567 tonnes, and imports jumped 135.3% to 103,113 tonnes. The FFB reference price slipped 1.3% to RM 48.90. The data confirms a seasonal uptick in output, though stock accumulation was slightly softer than some had expected.

Weather and El Niño

The ENSO remains in El Niño territory, with the ONI at +1.4. Notable dryness persists across Sabah, Sarawak, and Kalimantan, raising questions about the durability of the current production recovery. So far, yields have held up, but the market is watching for any signs of earlier-than-usual stress in the second half of the year.

Our model outlook

Our model outlook points to a drift lower in CPO prices over the next seven trading days. Pressures include peak production season, a weak energy complex, and positioning ahead of the MPOB July report, which is likely to show a further build in stocks. Downside is cushioned by firm Indian demand, the wide BOPO spread, and lingering El Niño concerns that keep sellers cautious. The key event risk is the MPOB release due in about four days: a larger-than-expected inventory build could trigger short-term selling, while any hints of an earlier production downturn could spark a rebound.

Week ahead

Attention turns to the MPOB July supply-demand report, due within days, as the primary catalyst. Traders will also monitor Indonesian reference price announcements and any policy signals around biodiesel mandates. Seasonal patterns suggest continued high output, but weather developments across the dry regions will be closely watched for any shift in production expectations.