Price action and biodiesel support

Malaysian CPO benchmark traded around $1,152 per metric tonne (RM4,673 per tonne), up 0.2% from the previous session, while the World Bank global palm oil benchmark stood near $1,117 per tonne. Brent crude was near $99 per barrel, down 0.2%, which still keeps biodiesel blending economics supportive for palm oil. With Indonesia positioning itself as a global reference for B50 biodiesel and reports of interest from Japan and Europe, demand expectations tied to higher blend mandates remain a constructive undercurrent. The ringgit was around 4.06 per dollar, and Indonesia's September reference price stood near $1,008 per tonne with the CPO export levy unchanged at $148 per tonne despite the higher reference.

Supply-side pressure and MPOB data

Malaysia's July MPOB release showed CPO production at 1,792,979 tonnes, up 9.4% month-on-month, while closing stocks rose 7.2% to 1,429,316 tonnes. Exports jumped 15.1% to 1,399,579 tonnes, and imports fell 51.9% to 49,566 tonnes, leaving a stocks-to-use ratio of 12.5%, which is ample. The market is now looking toward the August MPOB report, with previews suggesting inventories could hit a seven-month high. Palm oil production in the second half of 2026 is expected to remain firm, adding to seasonal pressure. At the same time, an El Niño event with an ONI of +1.8 and dry conditions in Kalimantan are being monitored because they may tighten supply later in 2027.

Cross currents and model view

Indonesian CPO exports grew 5.49%, and GAPKI has cautioned against raising CPO export levies to avoid pressuring smallholder fresh fruit bunch prices. The B50 mandate for 2027 is seen as needing flexibility, with palm oil supply a key challenge. Meanwhile, rival edible oil moves have been mixed, but firmer crude oil and DCE palm olein gains have supported CPO futures. Our model outlook notes that despite ample MPOB stocks and peak-season pressure, CPO is holding near 52-week highs thanks to a wide soy-palm spread, firmer crude, and the B50 ramp. However, the imminent August stock report and seasonal September softness argue for caution. We see a choppy week with a slight downward tilt of roughly -0.1% over seven trading days, compared with a published path of +0.4%.

For buyers

Watch the upcoming MPOB August stock and export figures, Indonesia's B50 implementation details and any levy adjustments, crude oil price moves around $99 per barrel, and weather updates for Kalimantan. The balance between peak-season supply and biodiesel-driven demand will likely set the near-term tone.