Market snapshot Malaysian CPO settled around $1,144/MT, up 1.2% from the previous session and equivalent to RM4,626/MT. The World Bank palm benchmark stood near $1,101/MT, while Indonesia's reference price was about $997/MT. Brent crude was flat at $94/bbl and USD/MYR was 4.04. The Malaysian benchmark's gain extends a run in which CPO futures ended the prior week higher for a fifth straight session, with expectations of continued bullishness.
Supply and demand drivers MPOB July data showed production up 9.4% month-on-month to 1,792,979 tonnes and closing stocks up 7.2% to 1,429,316 tonnes. Exports rose 14.5% to 1,392,178 tonnes, but imports fell 51.9%. The stocks-to-use ratio of 12.5% still leaves reasonable near-term cover, yet attention is shifting to forward supply.
El Niño conditions, with an ONI of +1.4, have left Sarawak and Kalimantan dry. This dryness is feeding concerns about a later yield hit, with some commentary warning of a severe El Niño and the worst impact possibly arriving in 2027. Indonesia's CPO production outlook is also being trimmed.
Indonesia's B50 mandate continues to support domestic demand. Export levy collections are projected at Rp41.22 trillion this year, and BPDP argues the blend is not pressuring exports, with levies up 73%. That dynamic removes more palm oil from export availability and underpins prices. At the same time, there are warnings that El Niño could erode B50 feedstock stocks and export levy revenue.
Demand and model view India's festival-season buying and rising edible-oil dependence add demand, with reports of active Indian demand supporting palm and soybean oil quotes. BMI has raised its 2026 average CPO forecast to RM4,453, and MPOC expects prices to hold above RM4,600 in September on tightening supply and geopolitical disruptions.
Our model outlook sees a bullish trend but stretched short-term conditions: wide BOPO, the Brent rally, El Niño and Indonesian policy support prices, while overbought RSI and peak-season/large July stocks create pullback risk. The base case is a modest upward drift with consolidation, with a published path of +1.6% over seven sessions.