Crude palm oil prices to remain high in September

Crude palm oil (CPO) prices are expected to remain above MYR4,600 ($1,139) per ton in September due to tightening supply prospects and geopolitical disruptions to global trade, according to the Malaysian Palm Oil Council (MPOC). Forward contracts for 2027 were trading above MYR5,000 per ton in mid-August, reflecting concerns over the potential impact of El Niño.

Additional support could come from stronger demand for palm oil for biodiesel production in Indonesia. The transition period for clearing B40 stocks ends in September, after which the shift to B50 could boost domestic CPO consumption.

Malaysia’s palm oil production rose 9.4% month-on-month in July to 1.79 mln tons, but remained below the previous year’s level for the fifth consecutive month. Exports increased by 14.5% to 1.39 mln tons, mainly due to stronger buying from India and Sub-Saharan Africa. Stocks, meanwhile, increased to 2.62 mln tons.

MPOC expects supply to tighten toward the end of the year. Malaysian production typically peaks in September-October before declining, while the oil extraction rate fell below its 10-year average in June and July. CPO production in the fourth quarter is expected to decline year-on-year.

Palm oil prices are also supported by shipping disruptions in the Red Sea and the Strait of Hormuz, as well as suspended Black Sea port operations, which are tightening sunflower oil supplies and pushing importers toward alternatives. In July, India increased its palm oil imports by 49.8% month-on-month, while sunflower oil imports rose by only 3.6%.

Tags: prices, Malaysia, palm oil