KUALA LUMPUR: The Malaysian Palm Oil Council (MPOC) anticipates crude palm oil (CPO) prices to remain supported at RM4,500 per tonne in the near term, backed by stronger biodiesel economics, elevated crude oil prices, and a possible onset of El Niño.
"However, further gains are likely to be capped by softer export demand amid inflation and weaker economic growth in key importing countries, alongside rising stocks as palm oil production gradually enters its seasonal peak," it said in a statement today.
Since the West Asia conflict escalated on Feb 27, the MPOC said vegetable oil prices have been uneven, with palm oil and United States (US) soybean oil rising 15-16 per cent mid-April, while sunflower oil, rapeseed oil and Argentine soybean oil recorded only marginal gains of two to five per cent.
It noted that palm oil and US soybean oil have been the primary beneficiaries of pent-up biodiesel policy and demand, underpinned by elevated energy prices.
"An estimated 1.0-1.5 million tonnes of palm oil in Southeast Asia are expected to be absorbed by stronger domestic demand in the second half of 2026.
"Malaysia would require an estimated additional 300,000 tonnes per annum under its B15 biodiesel mandate, while Indonesia would need a further 3.0 million tonnes per year to fulfil its B50 mandate if fully implemented, although biodiesel producers may continue at B40, depending on capacity readiness," said MPOC.
On El Niño, the council said there is also potential risk that the natural climate phenomenon will develop, which could provide additional support to the CPO price.
"Malaysia has experienced reduced rainfall since mid-March, and according to the Malaysian Meteorological Department, these conditions are expected to persist until June this year," it noted.
To recap, Malaysia’s palm oil stocks fell 16.1 per cent to 2.26 million tonnes in March, as exports surged to 1.55 million tonnes against production of 1.37 million tonnes.
According to the MPOC, the strong export performance was driven by front-loading ahead of rising shipping costs, alongside softer Indonesian exports following their pre-March rush to ship before the higher levy took effect.
"Despite global headwinds, exports in the first quarter of 2026 rose 29.1 per cent year-on-year, with shipments improving across all regions, except the Americas.
"North Africa recorded the strongest growth at 94 per cent, followed by South Asia (74 per cent), other Europe and Central Asia (47 per cent), Asia Pacific (24 per cent) and Sub-Saharan Africa (20 per cent)," it added. - Bernama
