Malaysian crude palm oil futures held firm this week, with the benchmark contract settling near $1,143 per metric ton, up 0.4% from the previous session. In ringgit terms, the contract closed at RM 4,613. The global benchmark, as tracked by the World Bank, stood at about $1,101 per ton, while Indonesia's reference price was set at approximately $997 per ton.
Energy and FX
Brent crude was flat at around $88 per barrel, offering little directional push for biodiesel blending economics. A weaker ringgit, trading near 4.03 per dollar, provided some support to Malaysian export competitiveness, while the Indonesian rupiah held around 17,696 per dollar.
MPOB July Data
Malaysia's July supply-demand report, released during the week, showed a 9.4% month-on-month rise in crude palm oil production to 1,792,979 tons, while closing stocks increased 7.2% to 1,429,316 tons. Exports jumped 14.5% to 1,392,178 tons, and imports fell sharply by 51.9% to 49,566 tons. The FFB reference price edged up 1.2% to RM 49.50.
Weather and ENSO
El Niño conditions persisted, with the ONI index at +1.4. Dry weather was noted in Sarawak and Kalimantan, raising concerns about future yields. These supply fears have been a key price driver.
Our Model Outlook
Our model outlook sees CPO consolidating near $1,146 with a mild upward bias. Support comes from El Niño supply fears and a wide $419 discount to gasoil (BOPO), while ample July stocks, peak seasonal production, and weak crude oil cap gains. Near-term trade is expected to be choppy, with a projected path of +1.1% over the next seven sessions.
Week Ahead
Market participants will watch for the upcoming MPOB August supply-demand report, due in mid-September, and any cargo-surveyor export data for the first half of August. Seasonal production patterns and weather updates in key growing regions will also be closely monitored. Policy announcements from Indonesia regarding export levies or biodiesel mandates could influence price direction.