Malaysian crude palm oil softened to about $1,144/MT (RM4,657/MT) on September 10, down 0.6% from the previous session. The World Bank palm oil benchmark stood at $1,117/MT and the Indonesian reference price at $1,008/MT. Brent crude was around $101/bbl, off 0.9%, and the ringgit traded near 4.07 per dollar. The wider weather pattern remains El Niño (ONI +1.8), but rainfall is broadly normal across producing belts.
Supply: stock build and seasonal peak
Malaysia's July MPOB data showed production rising 9.4% month-on-month to 1,792,979 tonnes and closing stocks up 7.2% at 1,429,316 tonnes, the highest in eight months. Exports jumped 15.1% to 1,399,579 tonnes, while imports fell 51.9% to 49,566 tonnes. The stocks-to-use ratio was 12.5% and the FFB reference was RM49.50 per tonne, up 1.2%. Reports indicate second-half 2026 palm output should remain firm, and a seasonal increase in supply is weighing on vegetable oil prices. The upcoming August MPOB report is expected to show another stock build, potentially a seven-month high, making the release a key near-term catalyst.
Demand and policy: biodiesel support and downstream push
Indonesia's B50 biodiesel mandate continues to anchor demand. Distribution has reportedly reached 94%, and the energy ministry is preparing administrative sanctions without fines for violators. The policy is framed not just as biodiesel blending but as a broader energy security and industrialization strategy. Meanwhile, Indonesia's CPO exports grew 5.49% year-on-year and officials are urging downstream processing. Domestic food demand is also expected to require around 10 million tonnes of CPO amid rising biodiesel use. Strong crude near $101/bbl helps biodiesel economics, while the Indonesian reference price remains below Malaysian levels, keeping export competitiveness.
Price action and model outlook
Futures ended lower on profit-taking after earlier support from firmer rival oils and crude, with occasional haze concerns in Indonesia. Our model outlook sees CPO rangebound near 52-week highs but facing near-term pressure from the expected bearish August stock build and seasonal supply peak. The wide biodiesel-palm oil (BOPO) spread, strong crude, and negative palm oil-gas oil (POGO) spread are limiting downside, but a MACD bearish crossover and crowded soyoil longs add downside risk. We expect a slight net decline over the next seven days, with volatility around the MPOB release, compared with a published path of +0.1% over the same sessions.
What buyers should watch
Key items: the MPOB August report for confirmation of stock builds, B50 implementation and any export levy or export governance changes under PP 24/2026, and how BOPO/POGO spreads react to crude and soyoil. A sustained seasonal supply rise could pressure prices, but policy-related biodiesel demand and firm energy may provide a floor.