Malaysia’s CPO benchmark slipped 0.7% to about $1,137/MT (RM4,617/MT), while the World Bank global palm benchmark stood at $1,117/MT and Indonesia’s reference price at $1,008/MT. Brent crude firmed 0.2% to around $105/bbl, supporting biodiesel blend economics, and the ringgit traded near 4.08 per dollar.

Malaysian supply builds

The MPOB August release showed CPO production at 1,817,499 tonnes, up 1.4% month-on-month, with CPO closing stocks rising 15.2% to 1,645,570 tonnes. Malaysia’s total palm oil stocks increased 7.48% to 2.82 million tonnes, as reported across trade media, reinforcing the bearish supply narrative. Exports declined 7.5% to 1,294,664 tonnes, while imports were little changed at 49,524 tonnes. The stocks-to-use ratio reached 14.1% and the FFB reference price was RM49.76, up 0.5% from the previous month. Futures had also been pressured by weaker export estimates earlier in the week.

Indonesian policy and biodiesel demand

Indonesia’s B50 biodiesel program is in focus. Pertamina reportedly aims for 100% distribution by the end of September, and GAPKI has called for B50 to be fixed before any B60 mandate in 2027, while warning about El Niño and smallholder replanting constraints. The September CPO reference price increase pushed Indonesia’s export levy to $148 per tonne, which can affect export competitiveness. Indonesian CPO exports have grown 5.49%, but downstreaming policy remains a swing factor.

Weather and energy support

El Niño remains active with an ONI value of +1.8 and dry conditions in Kalimantan, which could tighten production later. Brent crude near $105/bbl, supported by Middle East shipping concerns around the Strait of Hormuz and the Red Sea, underpins biodiesel demand and limits losses from weaker rival vegetable oils.

Price outlook

Our model outlook views the next seven sessions as a tug-of-war: bearish MPOB stock build and peak production season against bullish biodiesel demand, a wide palm discount to rival oils, and El Niño risk premium. The published path is +0.3% over seven sessions, but the absence of fresh cargo-surveyor export pace and Bursa FCPO quotes widens near-term uncertainty.

What buyers should watch

Key signals are the next Malaysian export estimates, confirmation of Indonesia B50 blending rates, and any escalation in dry weather. A continued rise in stocks or slower biodiesel uptake would keep spot offers under pressure, while crude strength and El Niño supply risks could provide support.