Malaysian crude palm oil futures have turned softer after an earlier recovery, with the benchmark trading around $1,135 per tonne, equivalent to roughly RM 4,609 per tonne at a ringgit near 4.06 to the dollar. Firmer crude and gains in Dalian palm olein had lifted the vegetable oil complex, but the market is now weighing a comfortable inventory position against a tightening forward supply picture.
Stocks at a year high Malaysian Palm Oil Board data put August closing stocks at 1,645,570 tonnes, a rise of 15.2% month on month and the highest level of the year. Crude palm oil production rose 1.4% to 1,817,499 tonnes, exports fell 7.5% to 1,294,664 tonnes, and imports were little changed at 49,524 tonnes. The fresh fruit bunch reference price was set at RM 49.76, up 0.5% month on month.
The build is real, but it is the forward picture that is drawing more attention. Commentary in the market points to a narrow global production surplus that could give way to a supply squeeze, with the current stock cushion masking slower forward output growth. That view has been reinforced by analysts who argue the market is not pricing the risk of tighter availability later in the season.
What is holding the downside Crude oil remains the main counterweight. Brent near $100 per barrel keeps palm-derived biodiesel economics workable and has repeatedly lent support to vegetable oil futures this month. The spread between palm and competing soft oils also stays unusually wide, which tends to pull price-sensitive buyers toward palm.
On the demand side, Indonesian biodiesel policy remains in focus. Domestic CPO requirements for biodiesel are seen climbing toward 35 million tonnes as the blend mandate becomes more aggressive, while the industry association GAPKI has asked the government to delay B60 and focus on optimising B50 first. Indian buying ahead of the Diwali festival is a further background support.
Supply and weather Seasonal output is the near-term pressure point. Commentary points to firm second-half production, and the ENSO state is El Niño with an ONI reading of +1.8. Notable dryness in Kalimantan is worth monitoring, though it has not yet translated into a supply shock.
Elsewhere, rival oils have been mixed, with soybean oil imports rising in the United States on biofuel demand and Indian edible oil imports continuing to favour palm over soyoil. Indonesia's export levy debate and its wider push on commodity pricing add a layer of policy uncertainty.