Price backdrop

Malaysian CPO benchmark traded at about $1,109/MT (RM4,528/MT), up 0.1% on the session, while the World Bank global benchmark was $1,101/MT and Indonesia's reference price was $1,030/MT. Brent crude firmed 0.4% to $92/bbl and the ringgit held near 4.08 per dollar. The contract has been trading near its highest since April, according to market reports, though below the RM4,819 level cited in some El Niño risk coverage.

Supply and demand

MPOB July data showed production at 1,792,979 t (+9.4% month-on-month), closing stocks at 1,429,316 t (+7.2% month-on-month), exports at 1,392,178 t (+14.5%), imports at 49,566 t (-51.9%), FFB reference at RM49.50 (+1.2%), and a stocks-to-use ratio of 12.5%. The inventory build and seasonal production peak are bearish for nearby prices, but strong exports—supported by India's edible oil imports hitting a 10-month high—are absorbing part of the extra supply. El Niño conditions (ONI +1.4) with dryness in Sarawak and Kalimantan threaten future output and keep a risk premium in the market.

Energy and policy

Brent near $92/bbl supports biodiesel blending economics. Indonesian reports highlight efforts to reduce diesel imports through B50 and 100% palm-based fuel, while subsidy discussions continue. The wide BOPO spread noted in our model outlook also cushions CPO against a crude pullback, though a fall in Brent would reduce the biofuel-linked demand floor.

Competing oils and trade

Cheap seasonal supplies of rapeseed and sunflowerseed oil from Russia and Ukraine are expected to pressure vegetable oil prices. Malaysia lowered its September CPO reference price while keeping the export duty at 10%, which could make Malaysian shipments more competitive, but may also signal softer official pricing.

Model outlook

Our model outlook sees CPO near $1,109/MT with a modest bullish technical bias (golden cross, positive MACD), but the MPOB July stock build and peak seasonal production cap upside. We expect a choppy drift toward the upper Bollinger band around $1,117 over the next seven sessions. Support comes from El Niño risk premium and the wide BOPO spread; risks include lower Brent and crowded speculative long positioning. Missing cargo-surveyor export pace and live soyoil/Dalian quotes widen uncertainty. The published path is +0.1% over seven sessions.

Buyer watchpoints

For buyers, key watchpoints are cargo-surveyor export estimates, live soyoil and Dalian price action, El Niño dryness in Sarawak and Kalimantan, and India's import pace. A Brent pullback or faster Malaysian stock build could cap rallies, while biodiesel policy moves and solid export demand tend to limit downside. Confirmation from export pace will be useful in assessing whether a move above $1,117 can be sustained.