Malaysian crude palm oil futures settled around $1,152/MT (RM 4,673), up 0.2% on the session, holding near 52-week highs even as supply-side data points to comfortable near-term availability. The global benchmark sits at about $1,117/MT, while Indonesia's reference price is set near $1,008/MT for September, with export levies unchanged at $148/MT.
Supply: Stocks Build, Production Rises
Malaysia's July MPOB report showed CPO output at 1,792,979 tonnes, up 9.4% month-on-month, while closing stocks rose 7.2% to 1,429,316 tonnes. Exports climbed a stronger 15.1% to 1,399,579 tonnes, but imports fell sharply, down 51.9% to 49,566 tonnes. The market now awaits the August MPOB release, widely expected to show inventories at a seven-month high as seasonal peak production continues.
Our model outlook sees prices holding near recent highs despite this ample stock picture and peak-season pressure. The imminent August data and typical September softness argue for a cautious near-term bias, with a choppy week expected and a slight downward tilt of roughly -0.1% over seven trading days.
Demand: Biodiesel and Crude Provide a Floor
Indonesia's B50 biodiesel implementation continues to draw international interest from Japan and Europe, with regional governments in East Kalimantan backing the program. Industry projections for a future B60 mandate suggest potential absorption of 23 million tonnes of CPO, underscoring growing energy-linked demand. Firmer crude oil, with Brent near $100/bbl, supports biodiesel blend economics and keeps palm competitive as a fuel feedstock.
The wide soy-palm spread and a record month for US soybean oil use in biofuels are lending additional support to the broader vegetable oil complex. Palm extended gains on stronger rival oils and crude in recent sessions, though traders remain cautious ahead of the MPOB data.
Weather and Currency
El Niño conditions persist, with the ONI at +1.8, and notable dryness in Kalimantan raises production risk concerns for 2027. The ringgit opened higher against the dollar amid rate-hike expectations, trading near 4.06 per dollar, while the rupiah held around 17,608. A firmer ringgit can temper Malaysian export competitiveness, though the currency's path remains tied to Fed policy signals.
Takeaway for Buyers
Watch the upcoming MPOB August inventory data as the key near-term catalyst; a seven-month high stock figure could pressure prices despite firm crude and biodiesel demand. Monitor El Niño-driven dryness in Kalimantan and any B50/B60 policy updates from Jakarta for signals on 2027 supply tightness.