KUALA LUMPUR: Crude palm oil (CPO) prices have remained firm above RM4,000 throughout January despite some fundamental headwinds, indicating that this price level is forming a near-term structural floor with limited downside risks, said Malaysian Palm Oil Council (MPOC) yesterday.
In a statement, it said, Indonesia’s biodiesel policy uncertainty has also eased following the clarification that B50 biodiesel programme will be postponed due to prevailing price relationship between palm oil and gas oil.
With B50 biodiesel narrative temporarily sidelined, market attention has now shifted back to the core fundamentals – production, export performance and stock levels, said MPOC.
Against this backdrop, it noted, global import demand for palm oil is expected to strengthen, potentially surpassing soybean oil in Q1’26. Soybean oil prices in Argentina reached a two-year high in January and traded at a premium of US$140 per tonne over Malaysian RBD palm olein.
Similarly, in India’s domestic market, soybean oil commanded a premium of US$84 per tonne over palm oil.
Despite palm oil’s clear price advantage, India’s import demand for palm oil has yet to fully recover, likely due to the recent weakening of the Indian rupee against the Malaysian ringgit. This setback should be viewed as temporary, as India will ultimately need to import palm oil regardless of currency movements, given its structural cost competitiveness. In addition, Indonesia’s announced increase of the CPO export levy to 12.5% from March 1 is expected to improve Malaysia’s palm oil market share in India and contribute to a drawdown in domestic palm oil stocks,” said MPOC.
It also disclosed that seasonal factors are also expected to support prices. February’s shorter trading month, combined with multiple public holidays such as Thaipusam, Lunar New Year and the fasting month, is likely to weigh on harvesting productivity and constrain near-term supply.
In parallel, it said, 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.
This clarity is expected to help absorb domestic soybean oil and support crushing activity ahead of the large Brazilian soybean harvest between March and May. Brazilian soybean production is projected to exceed 180 million tonnes in 2026, up from 178 million tonnes estimated in late 2025, supported by favourable weather.
Looking ahead, MPOC said palm oil prices in February are expected to remain range-bound between RM4,000 and RM4,300 per tonne, supported by seasonal declines in production and stocks.
A sustained price 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 added.
