Malaysian CPO benchmark is about $1,104/MT, or RM 4,520/MT, down 0.4% from the previous session. The World Bank benchmark sits near $1,101/MT and Indonesia’s reference price is about $1,030/MT. Brent crude is $89/bbl, up 0.5% on the day; USD/MYR is 4.09. The tone is one of rangebound balancing, with buyers pointing to palm’s discount to soy oil and positive technicals, while sellers point to a July stock build and peak production.

What is pushing CPO higher

The strongest underpinning is the BOPO spread. With soybean oil at $1,581/MT and Malaysian CPO at $1,104/MT, palm is trading $477/MT below soy oil. That discount is wide enough to encourage demand substitution, especially in price-sensitive food and biodiesel users, and it supports the case that buyers will switch into palm when soy oil is expensive. This does not force an immediate rally, but it reduces the downside risk and creates demand elasticity.

Technicals are also mildly supportive. The MACD histogram is positive, the 5/20 simple moving average is in a golden cross, and RSI sits at 50, neither overbought nor oversold. That says the near-term uptrend is intact but losing momentum; it invites dip-buying rather than breakout-chasing.

Longer-horizon buyers are also pricing some El Niño risk. The ONI is +1.4C, consistent with a developing strong El Niño. Sarawak and Kalimantan are dry, with Kalimantan forecast at only 2mm over the next seven days. This is a lagged driver: drought stress now can lower yields months later, so it supports anticipation of a tighter 2027 supply rather than changing spot supply today. Seven-day rainfall is 39mm in Peninsular Malaysia, 28mm in Sabah, 17mm in Sarawak and 30mm in Sumatra; no extreme flooding, so rainfall is neutral, though dry Kalimantan is a lagged stress.

Finally, the Diwali demand calendar is supportive. Diwali is 87 days away and the buying window opens in about 38 days. Festival restocking underpins demand for edible oils, giving importers a reason to maintain or increase near-term coverage even if it is not immediate.

What is pushing CPO lower

The biggest bearish input is the July MPOB data. Malaysia’s July closing stocks rose 7.2% month-on-month to 1,429,316 tonnes, a five-month high, and the stocks-to-use ratio is 12.5%, above the threshold where the market starts to worry about ample supply. Production rose 9.4% month-on-month to 1,792,979 tonnes; that is a strong seasonal build and leaves the market well supplied for now. High visible stocks reduce the urgency to bid for cargoes.

Peak production season adds to that supply pressure. Our model’s seasonal path shows production rising about 7.0% one month ahead, and August through October is the usual peak output window. As long as output is rising and stocks are building, any demand-driven rally has to absorb additional supply first.

Indonesia is another source of downward pressure. The rupiah is weak at about 17,884 per dollar. A weak rupiah means Indonesian exporters receive more domestic currency for dollar-denominated sales, which encourages them to sell more palm oil into the export market, adding to global availability. The large levy plus duty policy burden could eventually slow exports, but the current 72-day-old reference price clouds that signal, and near-term the incentive structure favors more Indonesian selling.

Speculative positioning also poses downside risk. CFTC soyoil net length is +80,681 contracts, at the 80th percentile of its range, but the weekly change was -29,174. A crowded long position that has begun to unwind is vulnerable to accelerated liquidation; if soyoil falls, palm can be dragged down through cross-commodity flows. Brent is not a clear offset: at $88.9/bbl, Brent is down 0.9% over seven days, though the Aug 11 headline noted CPO rallied on stronger crude. That mixed crude signal leaves the energy linkage neutral.

Where the balance sits

According to our model outlook, the factor count is 4 bullish and 4 bearish, so neither side has a decisive upper hand. The market is rangebound near $1,104/MT, with a base case drift to about $1,101 over the next seven sessions. Support is $1,093 and resistance is $1,116; the published path is -0.1% over the same window. Missing cargo-surveyor export pace and live Bursa quotes widen uncertainty, so the model is trading a range rather than a clear directional call.

What would have to change for the balance to shift? If cargo-surveyor data show export demand running above the seasonal pace, or if Indonesia’s levy/duty policy materially slows export sales, the bullish side would strengthen and the market could test $1,116. On the other side, if speculative long liquidation accelerates, or if August production and closing stocks continue to exceed expectations, the bearish side would dominate and the market could break $1,093. For now, the wide BOPO spread and positive technicals are holding the downside in check, while the five-month Malaysian stock build and peak-season supply keep a lid on upside.