KUALA LUMPUR (Sept 22): Crude palm oil (CPO) prices are expected to remain above RM4,700 per tonne until at least October, if not the rest of the year, according to the Malaysian Palm Oil Council (MPOC) statement on Tuesday.

MPOC reported that palm oil production remains below 2025 levels, marking a sixth consecutive month of year-on-year decline since March 2026, despite a 1.4% increase in production for August.

Exports also fell by 7.5% month-on-month due to weaker shipments to South Asia and Middle East markets. Despite this decline, full-year exports are projected to reach 16 million tonnes, a 5.2% increase from 2025’s volume.

The combination of increased production but weaker exports has led to palm oil stocks rising to 2.8 million tonnes in August. MPOC noted that high stock levels are likely temporary, as production and inventory in both Malaysia and Indonesia are projected to ease in the coming months.

This is primarily due to environmental and geopolitical concerns. Dry weather from El Niño continues to raise concerns over the impact on palm oil production, while disruptions in the energy market due to the ongoing US-Iran conflict have boosted biofuel and supported biofuel demand.

“Exports are projected to remain stable at around 16 million tonnes in 2027. As a result, Malaysia is expected to play an increasingly important role in supplying oil to global consumers. The current high stock level is therefore likely to be temporary,” said MPOC in the release.

Looking ahead, global consumption of major vegetable oils is forecast to rise by 6.1 million tonnes next year, outpacing total production growth of 3.1 million tonnes. Independent agency Oil World forecasts Indonesia's 2027 palm oil production to decline by 1.9 million tonnes and Malaysia's by 0.7 million tonnes.

MPOC highlighted that primary downside risks to CPO prices include potential easing in energy prices and seasonal stock accumulation as production reaches its peak in September or October.