Malaysian CPO benchmark firmed to about $1,143 per tonne (RM4,619) on 21 August, up 1.1% from the prior session, while global and Indonesian reference prices stood at roughly $1,101 and $997 respectively. Brent crude was near $93 a barrel, and the ringgit traded around 4.04 per dollar. Reports noted that Bursa Malaysia CPO touched its highest level in 20 months, with futures finishing higher for a fourth consecutive session on supply concerns and gains in soybean oil.

Supply and weather

Malaysia’s July MPOB data showed production rising 9.4% month-on-month to 1,792,979 tonnes, closing stocks up 7.2% to 1,429,316 tonnes, and exports up 14.5% to 1,392,178 tonnes. Imports fell sharply, by 51.9%, to 49,566 tonnes. The stocks-to-use ratio edged to 12.5%. Although the inventory build is seasonally typical, the market is looking beyond current output to supply risks ahead.

El Niño conditions are firmly in place, with an ONI of +1.4 and notably dry weather reported in Kalimantan. Some commentary describes the current event as a Godzilla El Niño and warns the worst impact on Indonesian CPO production may arrive in 2027. That forward supply worry supports prices even as Malaysian output grows.

Policy and biodiesel

Indonesia’s push toward a B50 biodiesel mandate remains a central demand pillar. Reports indicate the country may raise export levies by 73% to fund the programme, which could reduce palm oil available for export while increasing domestic absorption. Smallholder replanting assistance has reportedly been lifted to Rp60 million per hectare as part of the same supply-security effort. An Indonesian association has argued B50 would not suppress exports, but export levy and B50 stock dynamics are seen as vulnerable during El Niño.

Price views and model

Analysts and MPOC see prices staying firm above RM4,600 a tonne in September on tightening supply and geopolitical disruptions, with Malaysian research pointing to resilient biodiesel demand. India’s cooking-oil imports are rising for the festival season, though sunflower shipments remain constrained by war-related issues, potentially supporting palm demand.

With Brent near $93, biodiesel blend economics remain supportive, especially for palm-heavy mandates. Indonesian CPO reference at $997 remains cheaper than Malaysian and global benchmarks, but a larger export levy could narrow that discount for overseas buyers.

Our model outlook is held flat at the 2026-08-20 close of $1148 a tonne because no model view was available for this run; we are not signalling a direction we cannot support.

What to watch