Malaysian CPO benchmark slipped to about $1,135 per tonne (RM4,609), down 0.9% from the previous session, with the World Bank global palm oil benchmark near $1,117 and Indonesia's reference price about $1,008. Brent crude fell 1.4% to roughly $107 a barrel; USD/MYR was about 4.06. The KPBN physical auction saw CPO at Rp15,666 per kg and CIF Rotterdam at $1,595 per tonne.

MPOB's August data was the main bearish impulse. Total Malaysian palm oil stocks rose 7.48% month on month to 2.82 million tonnes, while CPO stocks climbed 15.2% to 1.65 million tonnes. Production increased 1.4% to 1.82 million tonnes, exports fell 7.5% to 1.29 million tonnes, and the stocks-to-use ratio reached 14.1%. Rising output against slower exports leaves the market well supplied near term.

Seasonal supply remains firm in the second half of 2026, adding pressure to vegetable oil markets. Meanwhile, El Niño conditions with ONI at +1.8 and dry weather in Kalimantan are risks for future yields, but they have not yet altered the current balance.

Indonesian biodiesel policy remains a two-way influence. B50 is reported nearly available at all fuel stations, and Pertamina has signaled readiness for B60 and potentially B100. But GAPKI has asked the government to delay B60 and focus on optimizing B50 while anticipating a decline in palm oil production. GAPKI also warned against raising the CPO export levy to avoid pressuring farmer FFB prices.

Energy and rival oils add crosscurrents. Brent remains high near $107 a barrel despite a 1.4% dip, and geopolitical risks to Middle East oil routes keep a premium in crude, which supports biodiesel blending margins in mandate markets. However, palm has fallen for three consecutive sessions amid weaker rival oils, and speculative long liquidation is a near-term risk.

Our model outlook sees CPO consolidating with a mild downside bias over the next seven trading days, with choppy trade around $1,110–$1,150. The bearish August stock build argues for pressure, but the wide BOPO spread, firm crude and pre-Diwali buying limit the downside; the published path is +0.1% over seven sessions.

Takeaway for buyers: watch September Malaysian export recovery, Indonesian policy resolution on B-series blending, and whether El Niño dryness deepens in Kalimantan. A choppy range near $1,110–$1,150 is more likely than a sustained breakout in the near term.