Malaysian CPO benchmark traded around $1,144 per tonne, equivalent to RM4,613 per tonne, up 0.2% from the previous session. The World Bank palm oil benchmark stood near $1,101 per tonne, and Indonesia's Kemendag reference price was about $997 per tonne. Brent crude rose 0.6% to about $89 per barrel, which matters for biodiesel blending economics, while USD/MYR held near 4.04.
Supply and Demand
MPOB's July 2026 release shows Malaysian CPO production at 1,792,979 tonnes, up 9.4% month on month, and closing stocks at 1,429,316 tonnes, up 7.2% month on month. Exports rose 14.5% month on month to 1,392,178 tonnes, but imports fell 51.9% to 49,566 tonnes. The stocks-to-use ratio sits at 12.5%. FFB reference price rose 1.2% to RM49.50. This points to peak production and comfortable inventories in Malaysia, even with strong export demand.
El Niño conditions, with ONI at +1.4, have left Sarawak, Sumatra/Riau, and Kalimantan dry. Industry sources warn that severe El Niño conditions could lower Indonesian output and, without faster replanting, Indonesia could face supply shortages next year. GAPKI reported Indonesian palm exports jumped 64% in June 2026, while production and consumption also rose. Indonesia's B50 biodiesel mandate is projected to increase domestic palm oil absorption, changing demand patterns. CPO futures rebounded on El Niño concerns after earlier pressure from weaker soybean futures.
Price Signals
MPOC has said CPO prices should stay above MYR4,600 in September amid tightening supply and geopolitical disruptions. A separate 2027 forecast sees world CPO around $1,650–1,720 per tonne, with B50 projected to increase. Our model outlook has CPO consolidating near $1,144 after the late-August pullback. El Niño supply fears and a wide soy-palm spread support an upside bias, but ample Malaysian stocks, peak production and seasonally soft September limit gains. We expect choppy trade with a slight net gain over the next seven sessions; the published path is +1.1%, but missing cargo-survey and palm futures data keep confidence low.
What Buyers Should Watch
- Early September cargo survey estimates for Malaysian exports.
- Indonesian production and export updates as dry weather affects key regions.
- Progress and feedstock implications of Indonesia's B50 mandate.
- Energy markets, especially Brent crude, for biodiesel blend economics.
- Soybean oil price moves, which still influence palm oil's substitution spread.
For buyers, the near-term setup is mixed: ample Malaysian stocks can cap rallies, but El Niño supply fears and rising biodiesel demand may keep the market supported. Watch for early signals of September export weakness or Indonesian policy shifts that could tilt the balance.