The Malaysian CPO benchmark is holding around $1,153/MT (RM4,663/MT), up 0.1% from the previous session and near 52-week highs. For context, the World Bank palm oil benchmark is about $1,117/MT and Indonesia’s Kemendag reference is about $1,008/MT. USD/MYR is about 4.04; our model holds FX constant, so currency effect is neutral. Technically, our model sees a bullish structure—golden cross and positive MACD—but the contract is stretched near the upper Bollinger band at about $1,170, with RSI at 66, so the rally is not unconstrained.

What is pushing CPO higher

Start with the BOPO spread. At $372/MT, palm oil is heavily discounted to soybean oil. That is a demand-switching mechanism: importers and biodiesel blenders with flexibility will choose the cheaper feedstock, and a wide spread pulls demand toward palm. Live CBOT soyoil keeps this as a daily lead.

Indonesia’s B50 rollout is another structural bid. Distribution now reaches 80% of the country and 90% of Pertamina stations. The mandate absorbs an estimated 3–4 million tonnes per year, consuming domestic supply and leaving less Indonesian palm for export, which supports Malaysian CPO.

Brent crude is reinforcing the biodiesel leg. Brent is at $95.8/bbl, up 8.8% over seven days. The POGO spread is at -$328/t, at the 0th percentile, meaning palm is cheaper than gasoil. That improves discretionary blending economics and adds demand.

Indonesia’s export policy is also bullish for Malaysian CPO. The reference price rose 1.1% to $1,008/MT, with a $126/MT levy and $148/MT duty. A high total export burden can slow Indonesian shipments and redirect demand to Malaysia, although GAPKI warns against further levy hikes.

Finally, El Niño is building a lagged supply story. The ONI is +1.8°C and GAPKI headlines warn Indonesian output could fall 2.9% in 2027. That is forward-looking, but it keeps buyers cautious about future tightness.

What is pushing CPO lower

Near-term supply data is the main drag. The upcoming MPOB release is about seven days away. The market is still digesting July figures: production rose 9.4% month-on-month to 1,792,979 t, and closing stocks rose 7.2% to 1,429,316 t. Even with exports at 1,392,178 t (+14.5% MoM), stocks are 61% above the five-year average. A September 3 headline cited higher stock expectations as a weight, and a seasonal production path of +7% next month adds bearish pressure.

September seasonality is also working against price. September has historically averaged -0.9% month-on-month, and the production peak runs from July to October. Heavy current output keeps supply pressure on the market.

Positioning is a third risk. CFTC managed-money soyoil is net long 109,912 contracts, up 21,470 week-on-week and at the 85th percentile of its two-year range. A crowded long is vulnerable to liquidation, and a soyoil selloff would narrow the BOPO spread and pull palm lower.

Which side has the upper hand

On balance, five bullish factors outweigh three bearish ones. Our model sees the upside with the upper hand: demand-side support from the BOPO discount, B50, Brent and Indonesian export burdens is stronger than the seasonal supply drag. Still, the next seven days are likely to be choppy with a slight downside bias into the MPOB data, while demand-side support limits losses. The published path is +0.3% over seven sessions, but missing cargo-surveyor export pace and Bursa FCPO quotes widen uncertainty.

What would have to change for the balance to flip: the MPOB release would need to confirm a much larger-than-expected stock build and slower export pace, the BOPO spread would need to narrow sharply, or Brent would need to reverse so discretionary blending fades. If CFTC soyoil longs liquidate, that would also spill across the vegoil complex. Conversely, strong cargo-surveyor exports and continued B50 progress would keep the bearish forces contained.