Crude palm oil (CPO) prices are expected to trade between RM4,400 and RM4,650 per tonne in August, supported by Indonesia’s implementation of its B50 biodiesel programme, stronger energy prices, and improved biodiesel economics, according to the Malaysian Palm Oil Council (MPOC).
In a statement, MPOC said rising geopolitical tensions between the United States and Iran pushed gasoil prices up by around 30% between early and mid-July, making fossil fuel more expensive than both palm oil and soybean oil. This has improved the competitiveness of palm oil as a biodiesel feedstock.
However, the council noted that further gains in CPO prices may be capped by softer global demand and elevated vegetable oil inventories in key importing markets.
Malaysia’s palm oil supply remains favourable, with data from the Malaysian Palm Oil Board (MPOB) showing that production increased 8% month-on-month to 1.63 million tonnes in June 2026 as the seasonal production cycle gathered pace. Despite the monthly increase, output was still 3% lower year-on-year, marking the fourth consecutive month of annual decline.
Palm oil exports also rose 6.1% from the previous month to 1.20 million tonnes in June, although export volumes remained 4% below the same period last year. MPOC attributed the weaker annual performance to softer demand from major markets such as China and India, amid lingering economic uncertainty and the impact of geopolitical tensions in West Asia.
Meanwhile, Malaysia’s palm oil inventories climbed to 2.5 million tonnes in June, reflecting stable supply conditions.
Looking ahead, MPOC expects global oilseed production to continue expanding, although growth is projected to slow during the 2026-2027 season. Combined output of soybeans, sunflower seeds and rapeseed is forecast to increase by 16.5 million tonnes, below the average annual increase recorded over the past four years.
The council said slower growth in oilseed production, coupled with rising demand for vegetable oils from the biofuel sector, is expected to provide longer-term support for vegetable oil prices.
While near-term demand remains moderate, MPOC expects seasonal restocking ahead of Deepavali to provide some support, particularly in India, which typically imports around 30% of its annual vegetable oil requirements between July and September.
With palm oil remaining the most competitively priced major vegetable oil, MPOC believes it is well positioned to benefit from the seasonal increase in demand in the coming months.
