Malaysian crude palm oil futures closed around $1,104 per tonne (RM 4,520), down 0.4% from the previous session, as the market digested a mixed supply-demand picture. The global benchmark hovered near $1,101, while Indonesia's reference price stood at about $1,030 per tonne. Brent crude held firm near $88 a barrel, down 0.5%, keeping biodiesel blend economics supportive.
Supply: Output and Stocks Climb
Malaysia's July data from MPOB showed CPO production at 1,792,979 tonnes, up 9.4% month-on-month, while closing stocks rose 7.2% to 1,429,316 tonnes—a five-month high as reported by The Star. Exports jumped 14.5% to 1,392,178 tonnes, but imports plunged 51.9% to 49,566 tonnes. The FFB reference price edged up 1.2% to RM 49.50.
Rising output and inventories are pressuring prices, a theme echoed in recent headlines noting that palm oil slipped on weaker Dalian oils and profit-taking. Yet the market remains supported by firm crude oil and anticipation of El Niño-related supply concerns.
Demand: Festive Buying and Biodiesel
India's vegetable oil imports surged 13% as palm oil demand accelerates ahead of the festive season, according to AgroSpectrum India. Traders at SD Guthrie Global Trading see potential for higher prices on this demand. Meanwhile, Indonesia, Malaysia, and Thailand have raised biodiesel mandates for 2026, with Pertamina launching nationwide B50 distribution. These policies, highlighted by the RBI as a driver of edible oil prices, underpin palm oil's fuel demand.
Weather and External Factors
El Niño conditions (ONI +1.4) are contributing to dry weather in key regions like Sarawak and Kalimantan, raising concerns about future yields. However, the market is also watching rival oils: soyoil and sunflower oil prices in China have weakened, and Black Sea disruptions are pushing India to seek sunflower alternatives. The vegetable oil complex is caught between high energy costs and rising supply, as UkrAgroConsult notes.
Outlook and What to Watch
Our model outlook sees CPO consolidating within a $1,093–$1,116 Bollinger band over the next seven trading days, with a mild bearish tilt from peak production and ample stocks, cushioned by a wide BOPO spread ($477/MT), El Niño anticipation, and firm Brent. The expected path is -0.2% over the week.
Missing cargo-surveyor export data, live soyoil quotes, and Dalian prices add uncertainty. Buyers should watch Malaysian export figures for early August, any shifts in China's vegetable oil demand, and weather updates from key producing regions. Also monitor India's import pace and biodiesel policy announcements, as these could quickly alter the supply-demand balance.