Malaysian crude palm oil futures settled around $1,104/MT (RM 4,515) on 2026-08-09, down 0.3% from the prior session, as the market consolidates ahead of the July MPOB supply-demand report. The global benchmark hovered near $1,101/MT, while Indonesia's August reference price has been set at $996.52/MT, a level that traders see as a key policy anchor for export levies and domestic pricing. The Malaysian Palm Oil Council has pegged CPO prices in a RM 4,400–4,650 range for August, a band that aligns closely with current futures and provides a near-term trading framework.

Supply: Peak Output and Stock Builds

MPOB's June data showed Malaysian 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 climbed 7.3% to 1,216,871 tonnes, but imports surged 135.3% to 103,113 tonnes, reflecting active arbitrage flows. The FFB reference price slipped 1.3% to RM 48.90. Our model outlook sees the market balancing these bearish stock dynamics against weather-related supply risks.

Weather remains a key watchpoint: El Niño conditions (ONI +1.4) have brought dry spells to Sarawak and Kalimantan, raising concerns about future production. Headlines highlight a surging probability of a strong El Niño, with analysts questioning how far off the long-awaited inventory inflection point may be. Any sustained dryness could tighten supplies later in the year.

Demand: Biodiesel and Imports

On the demand side, Indonesia, Malaysia, and Thailand have all raised biodiesel mandates in 2026, with Indonesia's B50 program now in nationwide distribution via Pertamina. This policy-driven demand is a structural bullish factor, though crude oil's flat performance near $84/bbl offers little extra support for biodiesel economics. India's vegetable oil imports surged 13% as palm oil demand accelerates, with edible oil imports expected to climb further ahead of festivals. Strong export outlooks from several sources underpinned prices despite weaker soybean and crude oil markets.

Price Drivers and Market Sentiment

CPO futures have been buffeted by profit-taking and softer soyoil, but remain on track for weekly gains. The Malaysian Palm Oil Council's RM 4,400–4,650 range for August, combined with Indonesia's $996.52/MT reference price, effectively sets the trading band until the MPOB July report provides fresh fundamental clarity. Our model sees range-bound trade within $1,090–$1,120, with a slight bullish tilt from B50 demand and Indian alternative sourcing. The wide BOPO spread provides a floor, while peak production and weak crude oil limit upside.

Takeaway for Buyers

Watch the upcoming MPOB July report for confirmation of stock builds and production trends, and monitor El Niño developments in Sarawak and Kalimantan—any deterioration could shift the balance quickly. Also track biodiesel policy implementation and crude oil moves, as they will influence the palm oil complex's direction in the near term. The August reference price and MPOC's range offer clear markers for assessing market moves against official expectations.