Palm oil futures edged lower on Thursday, tracking losses in rival edible oils, as market attention shifts back to supply-demand fundamentals after a period of geopolitical volatility.

Price Action and Competing Oils

Malaysian crude palm oil futures slipped again on July 16, following a decline in soybean and other vegetable oil markets. The pullback comes after a brief rebound earlier in the week, when stronger crude oil and soybean oil prices had lifted the complex. The seesaw movement underscores palm oil’s continued sensitivity to external vegetable oil markets and energy prices.

Geopolitical and Macro Overlay

Analysts at UkrAgroConsult note that the Middle East conflict has reinforced the link between vegetable oil prices and crude oil, a dynamic that has added an extra layer of volatility. Meanwhile, StoneX observes that markets are now returning to fundamental drivers after a period dominated by macro and geopolitical noise. The shift suggests that supply-demand balances and policy developments will carry more weight in the near term.

Indonesia’s B50 Programme: Supply and Export Implications

Indonesia’s B50 biodiesel mandate, officially launched this week, is set to consume an estimated 23.3 million tonnes of crude palm oil annually, according to Jakarta Globe. While the government insists current supply can support the programme this year, industry sources warn that higher output will be needed in the future. The mandate could divert significant volumes away from export markets, potentially tightening global availability. Some analysts estimate the policy risks $2.7 billion in lost palm oil export revenue, though Jakarta expects savings of IDR 177 trillion from reduced fuel imports.

Malaysian producers may benefit from any shortfall in Indonesian exports, with local officials noting that the B50 programme could boost demand for Malaysian palm oil in key markets.

Regulatory and Trade Developments

Indonesia is also considering sanctions against buyers who purchase palm oil at artificially low prices, a move aimed at protecting domestic margins. Separately, the country’s palm oil association has signed an MoU with Russia to expand trade cooperation, potentially opening new export channels.

Thailand has tightened its palm oil export controls, reshaping regional supply flows. Malaysia, for its part, has raised the August crude palm oil reference price while keeping the export duty unchanged at 10%.

India Demand Picture

India’s edible oil imports fell 30% in June from the previous year, driven by lower purchases of both palm and soybean oils. Despite the monthly drop, imports over the past eight months are up 7%, with palm oil’s share rising to 48%. The decline in June may reflect inventory adjustments and price sensitivity, but the longer-term trend points to steady demand.

Takeaway for Buyers

Watch Indonesia’s B50 implementation pace and any enforcement of export restrictions; these could tighten palm oil supply faster than expected. Also monitor crude oil moves and soybean oil spreads, as palm’s price direction remains tied to the broader vegetable oil complex.

Sources: UkrAgroConsult; ChemAnalyst; Jakarta Globe; Finimize; Fastmarkets; BioEnergy Times

Malaysian crude palm oil futures closed little changed around $1,104 per tonne today, as conflicting signals keep the market in a tight range. The flat session comes despite a 9.8% surge in Brent crude oil to $82/bbl, which bolsters biodiesel blending economics and strengthens the demand outlook for palm-based fuels.

Supply and Stocks Build

The latest MPOB data for June 2026 shows Malaysian CPO production rose 8.1% month-on-month to 1.638 million tonnes, while closing stocks increased 3.7% to 1.332 million tonnes. The stock build is in line with seasonal patterns and contributed to the market's capped upside. Exports managed a 6.2% monthly gain to 1.204 million tonnes, but that was overshadowed by a sharp 135% surge in imports—a sign of inter-market arbitrage flows. The FFB reference price eased 1.3% to RM 48.90.

Demand Headwinds from India

India's June vegetable oil imports plunged 29% year-on-year as the once-generous palm oil discount over soft oils has narrowed sharply. This is a major bearish factor for palm oil exports, as India remains the world's top buyer. Buyers should note that any further erosion in palm's price advantage will keep Indian demand subdued.

Biofuels and Policy Support

On the policy front, Indonesia's launch of the B50 biodiesel programme—requiring 23.3 million tonnes of CPO annually—provides a solid medium-term demand floor. This was reinforced by Jakarta Globe's report highlighting the massive feedstock needs. Combined with the spike in crude oil, biodiesel blending margins improve, making the mandate more attractive for obligated parties.

Malaysia's decision to keep the August CPO reference price elevated while maintaining the 10% export duty offers no immediate relief for buyers seeking lower-priced supply.

Weather and El Niño

The ongoing El Niño (ONI +1.0) is bringing dry conditions to Kalimantan, a key production region in Indonesia. Dry weather could curb yields in the coming months, adding a supply risk premium that may support prices into the second half of the year. However, our model outlook also flags seasonal July weakness, which typically sees lower demand as buyers wait for new-crop arrivals.

EU Deforestation Regulation and Market Access

The European Commission has finalised the product scope for the EU Deforestation Regulation, excluding leather but retaining palm oil. This removes some uncertainty for exporters, but compliance costs remain a factor.

Takeaway for Buyers The market is caught between opposing forces: a bullish energy complex and biofuel policy versus weak Indian demand and rising stocks. Watch the Brent-palm oil spread and Indonesian weather developments closely. The next catalyst may come from crude oil's ability to sustain gains or from El Niño's intensification. Near-term price direction is likely to remain choppy with a slight upward bias, but any breakout will require a clear shift in demand fundamentals or supply disruption.

Sources: Jakarta Globe; UkrAgroConsult; Oils & Fats International; The Economic Times; The Star; environment.ec.europa.eu

Malaysia's crude palm oil production rose sharply in June, up 8.1% from the previous month to 1.638 million tonnes, according to MPOB data. This lifted closing stocks to 1.332 million tonnes, a 3.7% month-on-month increase, as inventory accumulation outpaced export growth.

Export and import trends

Palm oil exports rose 6.2% month-on-month to 1.204 million tonnes during the same period. However, imports surged 135.3% to 103,113 tonnes, likely as local processors bought cheaper Indonesian supply. The net effect was a supply build-up, which typically exerts downward pressure on prices.

Price reaction and external influences

Despite the bearish stock data, the benchmark CPO futures held steady around $1,104/tonne, with a slight 0.1% gain. This stability can be attributed to soaring crude oil prices—Brent jumped 9.8% to about $82/bbl—which improves biodiesel blending economics. Additionally, Indonesia's push for a B50 biodiesel mandate supports overall demand for palm-based fuel.

Weather and seasonal factors

El Niño conditions (ONI +1.0) continue to raise concerns about future output, though current rainfall patterns show dryness in Kalimantan. The FFB reference price slipped 1.3% to RM 48.90, indicating some weakness in upstream margins. Seasonal July trends often bring weaker demand, which may cap price gains.

Our outlook

Our model outlook suggests CPO prices will see modest gains but remain volatile. Support from surging Brent crude, biodiesel mandates, and El Niño worries is countered by soft Indian demand, dry weather in key growing areas, and the typical seasonal slowdown. The market remains finely balanced between supply concerns and near-term stock pressure.

Overall, the June data points to a loosening supply-demand balance in Malaysia, with rising production and stocks outpacing export recovery. The market's resilience hinges on external energy prices and policy-driven demand, which may keep prices from falling sharply.

Indonesia’s formal launch of the B50 biodiesel programme on 14 July 2026 marks the most aggressive biofuel mandate in the palm oil sector’s history. Under the new policy, the country will require 23.3 million tons of crude palm oil annually to meet blending targets, according to official estimates. The figure represents roughly a third of Indonesia’s total CPO output, effectively locking a large share of supply into the domestic energy market.

Supply squeeze and export revenue risk

Industry analysts point out that diverting such a volume of CPO to biodiesel production will inevitably reduce the amount available for export. Several reports have flagged that the mandate could cost Indonesia up to $2.7 billion in lost palm oil export revenue. Compliance-minded buyers in India, China and the EU are now watching for any tightening of FOB offers out of Belawan and Dumai as domestic absorption rises.

Malaysia sees potential spillover demand

The neighbouring producer Malaysia has already signalled that its palm oil sector could benefit from Indonesia’s domestic pull. On 15 July, Kuala Lumpur set the August crude palm oil reference price higher while keeping the export duty unchanged at 10%. This pricing structure may encourage Malaysian sellers to step in where Indonesian supply tightens, particularly for refined products. The spread between RBD palm olein from the two origins is expected to narrow as Indonesian sellers prioritise local biodiesel mandates.

Long-term output challenges

While Indonesian officials have stated that current CPO supply can support B50 this year, they acknowledge that higher output will be needed in the medium term. The mandate comes at a time when global crude oil prices have tumbled, potentially undermining the economics of biodiesel blending. A Reuters report from late June noted that the biofuel programme faces a serious test if petroleum prices stay low, as the subsidy burden on the state budget could rise sharply.

What buyers should watch

For palm oil procurement desks, the key takeaway is that Indonesia’s domestic CPO absorption is structurally rising. Compliance-driven buyers—especially those sourcing for EU Renewable Energy Directive obligations—should monitor Indonesian export availability closely and consider diversifying origin to Malaysia. The B50 programme’s hidden costs, including potential land-use pressure and higher domestic CPO prices, will shape the market’s supply-demand balance for the rest of 2026 and beyond.

Sources: Jakarta Globe; BioEnergy Times; TradingView; Oils & Fats International; The Jakarta Post

Indonesia’s B50 Biodiesel Mandate Drives CPO Demand

Indonesia has officially launched its B50 biodiesel programme, requiring an estimated 23.3 million tonnes of crude palm oil annually to meet the mandate. This represents a significant increase in domestic CPO consumption, tightening supply availability for export markets. The B50 blend, up from previous B35, underscores Indonesia’s commitment to expanding palm oil-based fuel use amid rising global energy prices.

Malaysia Holds Export Duty Steady

Malaysia has raised its August crude palm oil reference price but kept the export duty unchanged at 10%. This stability supports export competitiveness for Malaysian CPO producers, though the reference price adjustment may influence pricing dynamics. The policy contrast with Indonesia’s growing domestic absorption could shift trade flows.

EU Deforestation Regulation Update

The European Commission has updated the product scope and digital tools for implementing the EU Deforestation Regulation (EUDR). Compliance-minded buyers now face refined due diligence requirements, with enhanced digital systems for tracking deforestation-free supply chains. This adds urgency for exporters to ensure traceability, particularly as EUDR enforcement approaches.

Supply-Demand Implications

Indonesia’s B50 mandate is poised to tighten global palm oil supplies, as a larger share of production is diverted to biodiesel. This supports palm oil prices but pressures buyers who rely on Indonesian exports. Meanwhile, Malaysia’s steady duty offers an alternative supply source, though its output is more limited. The EUDR updates increase compliance costs and risk for buyers without robust traceability systems, potentially widening price premiums for certified sustainable palm oil.

Outlook for Buyers

Buyers should prepare for sustained tightness from Indonesia and higher due diligence costs from EUDR compliance. Malaysian palm oil may see increased demand as a substitute, but overall supply constraints are likely to persist. Prices could remain elevated, with volatility driven by biodiesel policy and regulatory shifts.

Sources: Jakarta Globe; UkrAgroConsult; Oils & Fats International

Glycerine is a co-product of the oleochemical splitting process, in which natural fats and oils are hydrolyzed into fatty acids and glycerol. This explainer covers the recovery steps for palm-based glycerine.

The Splitting Process

In oleochemical splitting, palm oil or palm kernel oil is reacted with high-pressure steam at temperatures around 250°C. This breaks the triglyceride molecules into free fatty acids and crude glycerine. The reaction is typically carried out in a continuous countercurrent column.

The output stream contains two phases: a fatty acid phase and a sweetwater phase. The sweetwater is a dilute solution of glycerine in water, typically containing 10–20% glycerol by weight.

Glycerine Recovery Steps

• Evaporation: The sweetwater is concentrated through multiple-effect evaporators, raising the glycerine content to about 80–88%.
• Distillation: The concentrated glycerine is distilled under vacuum to remove impurities such as fatty acids, salts, and color bodies. This yields refined glycerine of 99.5% or higher purity.
• Bleaching and Deodorization: For pharmaceutical or food-grade glycerine, additional bleaching with activated carbon and deodorization are applied.
• Ion Exchange: Some producers use ion-exchange resins to remove trace metals and salts, producing high-purity USP-grade glycerine.

Key Quality Parameters

Buyers should be aware of common specifications: - Glycerol content: Typically 99.5% minimum for refined grades. - Moisture content: Usually below 0.5%. - Color: Measured on the APHA scale; below 20 is typical for premium grades. - Ash and MONG: Material other than glycerine (MONG) and ash content are controlled.

Market Context

Glycerine from palm oil splitting is a major source of global supply. It competes with glycerine from biodiesel production (a by-product of transesterification). Oleochemical glycerine tends to be higher purity and more consistent in quality.

Practical Considerations for Buyers

• Source verification: Ensure the glycerine is derived from splitting, not biodiesel, if purity is critical.
• Logistics: Glycerine is hygroscopic and may require stainless steel or lined storage.
• Pricing: Glycerine prices are influenced by fatty acid demand and biodiesel markets, but this explainer does not cover current prices.

For first-time buyers, understanding the recovery process helps in evaluating supplier quality claims and negotiating specifications.

Geolocation Coordinates The EU Deforestation Regulation (EUDR) requires palm oil suppliers to provide the geolocation of all plots of land where the palm fruit was grown. For plots larger than 4 hectares, this means submitting polygon coordinates (a set of latitude-longitude pairs that outline the field). For smaller plots, a single point (latitude and longitude) is acceptable. These coordinates enable buyers to verify that the oil palm cultivation did not occur on land deforested after December 31, 2020.

Traceability to Plantation Beyond coordinates, the regulation demands a traceability chain from the final product back to the plantation. This means suppliers must document every step: from the fresh fruit bunches harvested at the plantation, through transport to the mill, then to refineries and processing facilities, and finally to the finished palm product. For each facility in the chain, the name, address, and geolocation (or at least the country and region) must be recorded.

Due Diligence Statement Palm oil importers into the EU must submit a due diligence statement to the competent authorities. This statement declares that the palm product is deforestation-free and legal under the laws of the country of origin. Supporting evidence includes geolocation data, compliance with local land rights, and proof that the crop was not grown on peatlands (in some cases). Buyers are expected to collect and verify this information from their suppliers.

Practical Steps for Buyers - Request geodata upfront: When sourcing palm oil, ask for the specific geolocation polygons or points for all supplying plantations. - Validate the traceability: Ensure each supplier can provide a complete chain-of-custody document linking your shipment to specific fields. - Use third-party tools: Platforms like the Roundtable on Sustainable Palm Oil (RSPO) or Global Forest Watch can help assess deforestation risk, but geolocation data is the core requirement. - Plan for compliance: Non-compliant products cannot be placed on the EU market, so early integration of these data into procurement contracts is essential.

Key Takeaways The EUDR places a heavy emphasis on precise, plot-level data rather than broader supply chain certifications. For procurement managers, the main shift is from relying on mass balance or segregated certified volumes to demanding exact geolocations for every palm fruit sourced. This allows buyers to risk-assess their supply base and ensures that the palm oil they purchase is truly deforestation-free.