KUALA LUMPUR (May 19): The Malaysian Palm Oil Council (MPOC) expects crude palm oil (CPO) prices to stay at around RM4,400 per tonne in June, as weather risks and uncertain trade flows loom.

In a statement on Tuesday, MPOC said vegetable oil prices may also turn firmer after recent declines, which were largely driven by profit-taking funds and speculators.

It added that supply risks are still elevated due to unresolved geopolitical tensions and the possible emergence of El Niño conditions, which could add further disruptions to vegetable oil output in the upcoming season.

“El Nino typically brings drier-than-normal weather conditions to Southeast Asia, reducing rainfall and soil moisture and potentially affecting regional agricultural supply,” said the council.

The Malaysian Meteorological Department (MET) expects El Niño conditions to develop between June and July, and potentially persist into early 2027, said MPOC.

Palm oil competitiveness has improved, said the council, following developments in the US biofuel sector. Soybean oil prices in Europe climbed to their highest levels since November 2022 in mid-May, which made it the most expensive major vegetable oil. 

During the period, soybean oil traded at a premium of US$145 per tonne over rapeseed oil, US$110 per tonne over palm oil, and US$45 per tonne over sunflower oil in the global market.

MPOC said palm oil remains the most competitively priced vegetable oil in India, while Malaysian palm olein is also trading at a slight discount to Argentine soybean oil, which could support demand. 

Malaysia’s palm oil stocks rose marginally to 2.31 million tonnes in April, supported by seasonal production gains as drier weather improved harvesting conditions and fresh fruit bunch yields.

Exports from January to April 2026 increased 25.5% year-on-year, or 1.1 million tonnes, to 5.38 million tonnes, the highest since 2019. However, exports declined 14.3% month-on-month in April to 1.30 million tonnes, though still accounting for 80% of Malaysia’s palm oil production for the month.

Combined palm oil exports from Malaysia, Indonesia and Thailand rose by 1.9 million tonnes in the first quarter of 2026. However, MPOC said this trend is expected to reverse between April and September.

According to Oil World projections, combined exports from the three countries are expected to fall by two million tonnes in the second and third quarters, mainly due to lower Indonesian shipments as more palm oil is redirected towards domestic energy use.

Malaysia’s exports are projected to rise by 400,000 tonnes over the same period, while Indonesia’s exports are expected to decline by 1.7 million tonnes. As a result, a sharp build-up in regional palm oil stocks is not expected during the peak production season.

Separately, the US Department of Agriculture (USDA) has projected record-high global oilseed production for the 2026/2027 season. Soybean output is expected to rise by 14 million tonnes, sunflower seed by seven million tonnes, and rapeseed by 1.4 million tonnes.

Collectively, production of the three major oilseeds is forecast to increase by 4%, or 22.4 million tonnes, to a record 600 million tonnes.