Malaysian crude palm oil opened the session near $1,154/MT, a small 0.1% gain from the previous session and equivalent to RM4,664/MT at an exchange rate of 4.04 ringgit per dollar. The World Bank global palm oil benchmark was lower at around $1,117/MT, while Indonesia’s September reference price sat near $1,008/MT. Brent crude was steady at about $96/bbl, up 0.2%, supporting biodiesel blend margins.
Supply and stocks are the near-term drag Malaysian Palm Oil Board data for July showed production climbing 9.4% month on month to 1,792,979 tonnes, while closing stocks rose 7.2% to 1,429,316 tonnes. Exports also rose a strong 14.5% to 1,392,178 tonnes, but imports fell 51.9% to just 49,566 tonnes. The stocks-to-use ratio reached 12.5%, leaving the market with a comfortable supply cushion as peak production arrives. Fresh news that CPO futures closed lower on weak soybean oil and higher stock expectations reinforced the soft tone. However, the monthly export gain and a fresh FFB reference price of RM49.50 (+1.2% month on month) show demand is still absorbing some of the additional output.
El Niño and biodiesel demand offset some downside El Niño conditions continue with an ONI of +1.8 and notably dry conditions in Kalimantan. Market reports said CPO futures rebounded on El Niño concerns on August 28, and Gapki warned Indonesia’s 2027 output could drop 2.9%, although Gapki also said the impact is manageable and the industry remains optimistic about the 2026 B50 policy. Indonesia aims to start full B50 biodiesel blending on 1 October 2026, with national distribution already reported above 80%. The wider BOPO spread and firm Brent prices near $96/bbl keep biofuel blending attractive, which supports palm oil demand. Indonesia’s September CPO reference price increase to about $1,008/MT kept the export levy unchanged at $148/MT, according to official reports.
Our model outlook Our model outlook flags a mildly negative near-term bias as peak Malaysian production and high July stocks meet September seasonal softness and weak soybean oil. The wide BOPO spread, strengthening El Niño, and Indonesia’s B50 rollout are expected to cap the downside. The lack of cargo surveyor export pace and Bursa FCPO quotes widens uncertainty. The published path is +0.1% over the next seven sessions.
For buyers, the key watch items are Malaysia’s export pace in the first half of September, any signs of El Niño-related yield stress in Kalimantan, and whether Indonesia’s B50 implementation stays on schedule. High stocks create a buffer, while biodiesel and weather risks could tighten the market quickly.