Malaysian CPO benchmark edged up 0.4% to about $1,143 per tonne, or RM4,613 per tonne, keeping its premium over the World Bank palm oil benchmark near $1,101 and Indonesia’s Kemendag reference around $997. Brent crude was flat at roughly $88 a barrel, while the ringgit hovered near 4.03 to the dollar. That leaves the biodiesel feedstock spread wide enough to support discretionary demand from Indonesian and Malaysian blenders, although soy oil positioning is crowded and could trigger spillover selling.
The latest MPOB July data lean bearish on the surface. Malaysian production climbed 9.4% month-on-month to 1,792,979 tonnes, closing stocks rose 7.2% to 1,429,316 tonnes, and exports jumped 14.5% to 1,392,178 tonnes while imports dropped 51.9% to 49,566 tonnes. FFB reference price ticked up 1.2% to RM49.50 per tonne and the stocks-to-use ratio printed at 12.5%. Indonesian June output also rose 8.59% to 5.28 million tonnes, and GAPKI reported that Indonesian palm exports surged 64% in June, adding to near-term availability. Yet the market is looking beyond this seasonal stockbuild.
That forward view is dominated by El Niño. With ONI at +1.4 and dry conditions reported in Sarawak and Kalimantan, producer groups caution that 2027 output could be clipped. GAPKI is urging faster replanting of smallholder areas, while MPOC has said prices should remain above RM4,600 in September because of tightening supply and geopolitical disruptions. On the demand side, B50 biodiesel promotion continues to widen the domestic offtake story in Indonesia, and CPO futures have reacted positively to these weather-related supply worries even as soybean futures occasionally drag the complex lower. A rebound in CPO futures on El Niño concerns underscores the market’s sensitivity to rainfall headlines.
Our model outlook sees a choppy, slightly positive bias over the next seven days, with a published path of +1.4%. The technical uptrend is intact but CPO sits near its upper Bollinger band, and crowded soyoil positioning raises the risk of a short-term correction. A wide BOPO spread and repeated supply warnings should limit downside, while the July stockbuild and seasonal September softness cap the upside. In that range, pullbacks are likely to be shallow but not completely absent.
For buyers, the near-term triggers are rainfall updates in Sarawak and Kalimantan, any escalation or delay in B50 implementation, movements in soybean oil and Brent, and whether CPO can hold above the RM4,600 area without a corrective flush.