KUALA LUMPUR (June 19): The Malaysian Palm Oil Council (MPOC) expects crude palm oil (CPO) to trade between RM4,400 and RM4,650 per tonne in July.
This is supported by the tightening supply outlook in Indonesia, rising El Niño risk and shifting global vegetable oil trade dynamics.
“Although oil palm plantations in Malaysia and Indonesia have yet to be affected as of June, the likelihood of a stronger El Niño emerging from July or August is increasing.
“A strong El Niño could reduce rainfall and bring drier conditions across Southeast Asia, Australia and India, although the impact on palm oil yields and production would only become evident after a lag of nine to 12 months,” the MPOC said in a statement on Friday.
Nevertheless, the MPOC said price gains may be capped by elevated vegetable oil inventories in key importing markets.
“Biodiesel economics have also become less supportive, as gasoil prices have fallen below palm oil prices in the futures market,” it added.
Further, as of mid-June, US soybean oil was trading at a premium of US$580 per tonne over Argentine soybean oil.
This was due to the US biofuel mandate and restrictions under the 45Z biofuel tax credits, which favour North American feedstocks.
The unusually high premium of US soybean oil since March 2026 has sharply reduced its export competitiveness.
“Exports are expected to remain subdued if the premium persists, leaving global importers increasingly dependent on South American supplies,” the council said.
Malaysia’s palm oil production declined by a 6.9% month-on-month to 1.51 million tonnes in May.
At the same time, there was a drop in exports due to slower price volatility which translated into lower shipments in May and June.
Nonetheless, cumulative exports from January to May 2026 increased by 13.8%, with the largest increases in exports to India, Kenya and Vietnam.
The MPOC also noted that vegetable oil stocks in major importing markets have risen sharply, citing weaker near-term consumption amid inflationary pressures.
Thus, elevated stocks in both markets may temporarily slow import demand in the near term and this may help to cap price gains of CPO.