CPO to hold above RM4,600 as supply tightens, trade disruptions lift demand
KUALA LUMPUR: Crude palm oil (CPO) prices are expected to remain firm above RM4,600 per tonne in September, supported by tightening supply prospects, resilient biodiesel demand and geopolitical disruptions that are reshaping global vegetable oil trade flows, according to the Malaysian Palm Oil Council (MPOC).
Malaysian palm oil prices are forecast to stay above RM4,600 per tonne in September, according to the Malaysian Palm Oil Council (MPOC). Tightening supply, robust biodiesel demand, and geopolitical disruptions influencing global vegetable oil trade are all contributing to the firm price outlook. Forward contracts for crude palm oil futures on Bursa Malaysia Derivatives have also surpassed RM5,000 per tonne.
Malaysian CPO prices climbed 3.9% in July, outpacing other significant vegetable oils. Sunflower oil increased 2.7%, while soybean oil prices in Argentina rose 1.1%. European rapeseed oil dropped 0.8%. Palm oil production typically peaks in September or October before declining in the fourth quarter, but output growth from the first seven months of 2026 is waning.
Malaysia's OER from January to May was notably above its 10-year average due to favorable rainfall earlier in the year, but it has since fallen below the long-term average and is expected to remain so for the remainder of the year. As the season sees a downturn in production and oil extraction rates ease, palm oil yields are anticipated to fall year-on-year in Q4 2026, tightening supply at year-end.
Geopolitical tensions are also disrupting key global trade routes, including the Bab al-Mandeb Strait, Red Sea, and Strait of Hormuz, affecting sunflower oil exports. This is shifting vegetable oil demand in major importing markets, particularly India, towards palm oil as buyers stockpile ahead of the festive season. Malaysian palm oil production rose 9.4% month-on-month to 1.79 million tonnes in July 2026, but it remained below last year's level, marking the fifth consecutive month of year-on-year decline since March 2026.
Despite strong exports to India and Sub-Saharan Africa, palm oil stocks in Malaysia are not a major worry, as Indonesian palm oil inventories are relatively low due to high biodiesel demand. The broader vegetable oil market continues to benefit from biodiesel demand and geopolitical uncertainty, with palm oil leading gains among major edible oils.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
