Malaysian benchmark crude palm oil closed around $1,122/MT (RM4,544/MT), up 1.2% from the previous session, marking the highest level since April. The World Bank global palm oil benchmark sat near $1,101/MT, while Indonesia's Kemendag reference was about $997/MT. Brent crude at $92/bbl (+0.2%) and USD/MYR at 4.05 keep biodiesel blend economics and ringgit-linked export competitiveness in focus.

Supply and stocks

Malaysia's July MPOB data showed CPO production rose 9.4% month-on-month to 1,792,979 tonnes, closing stocks climbed 7.2% to 1,429,316 tonnes, and palm oil exports jumped 14.5% to 1,392,178 tonnes; imports fell 51.9% to 49,566 tonnes. The stocks-to-use ratio was 12.5%, and the FFB reference price rose 1.2% to RM49.50. While the monthly stock build is seasonally normal, weather remains the larger risk. El Niño is confirmed with an ONI of +1.4, and rainfall reports show dry conditions in Sumatra/Riau and Kalimantan, with some projections placing the worst Indonesian production impact in 2027.

Demand and biodiesel

Indonesia's B50 mandate is advancing, with reports that Dexlite and Pertamina Dex now contain palm oil. Production is forecast to slow, and some reports warn that the B50 fund and export levies could erode. Stronger Brent and a wide BOPO spread support blending economics, but El Niño supply fears raise questions about feedstock availability and biodiesel fund resilience. India's festival-driven edible oil demand is providing support, although July import data are mixed—one source reports a 10-month high while another shows an 8% decline. Malaysia has lowered its September CPO reference price while keeping export duty at 10%, which may affect landed cost calculations.

Outlook

Several market commentators expect CPO to hold above RM4,600 in September, with one projection as high as RM4,819 due to El Niño and geopolitical disruptions. Bernama reported futures are likely to stay firm on tighter supply expectations. Our model outlook puts CPO at $1,124/MT (+1.4% over seven days), with a breakout above the upper Bollinger Band and positive MACD. Bullish factors include El Niño supply fears, dry Indonesian palm belts, Brent strength, USD/MYR strength, and the wide BOPO spread. Bearish factors include still-elevated MPOB stocks, seasonal production peak, and a crowded soyoil net long. Base case is consolidation with mild gains. Missing cargo surveyor data and live Bursa quotes widen uncertainty.

For buyers

Watch ENSO updates and rainfall across Sumatra and Kalimantan, August export estimates from cargo surveyors, Indonesia's B50 funding and export levy mechanisms, Malaysia's September reference price and duty, and any shift in India's festival buying. Legal cases around Indonesian CPO exports—including reports of 25 parties and alleged trillion-rupiah gains—add policy uncertainty that could influence trade flows. Indonesian stakeholders are also debating single-door export policy and price guarantees.