KUCHING: Crude palm oil (CPO) prices have remained above RM4,000 per tonne throughout January and are expected to stay range-bound between RM4,000 and RM4,300 in February.
The Malaysian Palm Oil Council (MPOC) said the market’s ability to hold above RM4,000 despite ongoing fundamental headwinds suggests the level is emerging as a near-term structural floor with limited downside risks.
It noted that uncertainty surrounding Indonesia’s biodiesel policy has eased following clarification that the B50 biodiesel programme will be postponed, citing the current price relationship between palm oil and diesel.
With the B50 biodiesel narrative temporarily sidelined, MPOC said market focus has shifted back to core fundamentals such as production trends, export performance and stock levels.
“We expect global import demand for palm oil to strengthen and potentially surpass soybean oil in the first quarter of 2026,” it said.It added that soybean oil prices in Argentina reached a two-year high in January and traded at a premium of USD140 per tonne over Malaysian RBD palm olein.
“In India’s domestic market, soybean oil commanded a premium of USD84 per tonne over palm oil,” the council said.
Despite palm oil’s clear price advantage, MPOC said India’s import demand has yet to fully recover, likely due to the recent weakening of the Indian rupee against the Malaysian ringgit.
It described this as a temporary factor, noting that India will ultimately need to import palm oil regardless of currency movements given its structural cost competitiveness.
MPOC also said Indonesia’s planned increase in the CPO export levy to 12.5 per cent from March 1, 2026 is expected to improve Malaysia’s palm oil market share in India and contribute to a drawdown in domestic palm oil stocks.
Seasonal factors are also expected to provide near-term price support.
MPOC said February’s shorter trading month, coupled with public holidays such as Thaipusam, Lunar New Year and the fasting month, is likely to weigh on harvesting productivity and constrain supply.
“In parallel, optimism is building that US domestic soybean oil consumption will increase, supported by greater clarity on the 45Z biofuel policy and Renewable Volume Obligations in early March,” it said.
“This is expected to help absorb domestic soybean oil and support crushing activity ahead of the large Brazilian soybean harvest between March and May 2026.”
The council noted that Brazilian soybean production is projected to exceed 180 million tonnes in 2026, up from an estimated 178 million tonnes in late 2025, supported by favourable weather conditions.
“A sustained rally in palm oil and other vegetable oils would require either a progressive rollout of Indonesia’s B45 biodiesel mandate, a recovery in crude oil prices, or clarity on US biofuel policy that boosts soybean oil demand,” it said.
