Malaysian CPO benchmark eased 1.0% to about $1,150/MT, equivalent to RM4,647/MT, after a seven-day 3.1% rally took prices to the upper Bollinger Band. The World Bank benchmark was about $1,101/MT and Indonesia’s reference about $997/MT; the wide spread keeps Malaysian cargoes competitive in some destinations.

Supply MPOB July data showed a strong supply-side month: CPO production rose 9.4% month on month to 1,792,979 tonnes, while closing stocks increased 7.2% to 1,429,316 tonnes. Exports jumped 14.5% to 1,392,178 tonnes, but imports fell 51.9% to 49,566 tonnes. The stocks-to-use ratio stood at 12.5%, and the FFB reference price rose 1.2% to RM49.50. Peak production season is underway, and the stock build argues for consolidation in the near term.

Demand and policy Brent crude slipped 0.5% to about $85/bbl, reducing the energy-linked appeal of palm-based biodiesel blends. However, Indonesia’s B50 mandate and projected export levy revenue of Rp41.22 trillion this year highlight policy support for domestic palm absorption and replanting. Reports also point to a possible 5-million-tonne reduction in Indonesian CPO output by 2027, which could tighten medium-term supply. One government agency clarified it lacks authority over CPO export reference prices, adding uncertainty to the levy framework, while Indonesia and Malaysia continue to compete on pricing strategy.

Price outlook USD/MYR at about 4.04 keeps ringgit-denominated CPO relatively stable for Malaysian exporters. El Niño conditions remain in place with ONI at +1.4, and dry conditions in Sarawak and Kalimantan are being monitored for yield stress. Futures ended higher for a fifth straight session in mid-August before profit-taking and weaker crude pulled prices lower. Our model outlook sees CPO near 52-week highs after the rally to the upper Bollinger Band. The strong July stock build and peak output point to consolidation, while wide BOPO ($328) and negative POGO provide demand-side support. Weaker crude and profit-taking argue for a mild mean-reverting pullback over the next seven trading days, with downside limited by Indonesia policy tightening and El Niño anticipation. The published path is +0.2% over seven sessions.

For buyers, the key watch items are whether Malaysian export pace can absorb rising production, how Indonesia’s levy and B50 implementation affect available supply, and any crude oil reversal. Dry weather across Sarawak and Kalimantan adds upside risk to forward pricing if it persists into the peak production season.