Malaysian CPO benchmark is about $1,122/MT, up 1.2% from the previous session and equivalent to RM4,544/MT. The World Bank palm oil benchmark is about $1,101/MT and Indonesia’s reference price is near $997/MT. Our model outlook has CPO closing at $1,124/MT, up 1.4% over seven days, with price above the upper Bollinger Band and MACD positive.
What is pushing the price up
Technical breakout momentum is the first bullish force. The contract has closed above the upper Bollinger Band near $1,121, with MACD positive, a golden cross and RSI around 64. The close is the highest since April, which attracts trend-following and momentum buying, though the move is extended and could invite profit-taking.
El Niño and dry Indonesian palm belts are the second bullish force. ONI is +1.4°C, consistent with El Niño, and the next seven days are dry in Sumatra/Riau (15mm) and Kalimantan (0mm). Palm yields respond to moisture stress with a lag, so current dryness is being priced as future supply cuts, keeping buyers active now.
Brent crude strength is the third bullish force. Brent is about $92/bbl and up 3.5% over seven days. Higher fuel prices improve the economics of biodiesel blending. Because CPO is a feedstock for biodiesel, stronger biofuel demand pulls the vegetable oil complex higher, including palm.
Currency and the wide BOPO spread are the fourth and fifth bullish forces. The ringgit is firm around 4.05 per dollar, which lifts the dollar-quoted CPO price for a given ringgit price. Soybean oil is about $1,590/MT, leaving CPO at a $466/MT discount; this heavy discount encourages demand switching from soybean oil to palm.
Indonesia policy and B50 are the sixth bullish force. Indonesia’s reference price is $997/MT, with a $125 levy and $148 duty, a total policy burden of $273/MT. The B40 to B50 blending mandate absorbs domestic palm supply, and corruption probes plus a one-door export policy could disrupt Indonesian flows, making Malaysian CPO more competitive.
What is pushing the price down
The MPOB July stock build is bearish but stale. Malaysia’s closing stocks rose 7.2% month-on-month to 1,429,316 tonnes, 61% above the five-year average with a stocks-to-use ratio of 12.5%. A conflicting headline citing 2.63m tonnes adds uncertainty; if accurate, the stock picture would be even more bearish. These data lag current dry weather and may not capture the latest export or weather shift.
Seasonal production peak is the second bearish force. July through October is the peak production window. The seasonal path shows production rising 7.0% one month ahead, which adds near-term supply pressure.
Crowded soyoil net long is the third bearish force. CFTC managed-money net soyoil position is +80,922 contracts, in the 80th percentile and +0.70σ. That extreme long is vulnerable to liquidation. If soyoil speculators unwind, the vegetable oil complex, including palm, could fall.
Festival demand timing is neutral, not bearish. Diwali buying window opens in about 32 days; Indian imports rose in July, but the pre-festival effect is statistically unreliable, so it does not shift the immediate balance.
Which side has the upper hand
Our model counts six bullish factors against three bearish ones, so the upside currently has the upper hand. The base case is consolidation with mild gains. To flip bearish, we would need credible confirmation of much higher stocks, such as the 2.63m-tonne figure, a decisive seasonal supply wave, and/or an unwind in soyoil longs that breaks CPO back below the Bollinger band. A reversal in Brent or in Indonesian policy support would also matter. Missing cargo surveyors and live Bursa quotes widen uncertainty, and our published path is only +0.1% over seven sessions, so the bullish edge is real but narrow.