Crude Palm Oil Prices Expected to Trade Between RM4,400 and RM4,650 per Tonne in July

KUALA LUMPUR, June 2026 — Malaysia’s crude palm oil prices are expected to remain firm in July, with the commodity projected to trade between RM4,400 and RM4,650 per tonne, supported by tighter supply prospects in Indonesia and rising El Nino risks.

The Malaysian Palm Oil Council, or MPOC, said the forecast comes as the global vegetable oil market continues to face uncertainty due to biofuel policy changes, supply disruptions and higher input costs.

MPOC said crude palm oil prices are expected to move within the RM4,400 to RM4,650 per tonne range in July, backed by expectations of tighter Indonesian supply and the increasing risk of El Nino.

The projection is important for Malaysia because palm oil remains one of the country’s key commodity exports. Price stability at the higher range could support plantation companies, smallholders and exporters, although demand from major importing markets will still play an important role.

According to MPOC, Malaysia’s palm oil production fell 6.9% month-on-month to 1.51 million tonnes in May. The decline was partly due to oil palm trees entering a temporary resting phase after recording higher-than-usual production between October 2025 and March 2026.

MPOC also said May had two public holidays compared with none in April, reducing the number of harvesting days and contributing to lower production.

Although May shipments slowed, Malaysia’s cumulative palm oil exports from January to May 2026 increased by 783,000 tonnes, or 13.8%. MPOC said the largest export gains were recorded in shipments to India, Kenya and Vietnam, which together rose by 749,000 tonnes.

Sub-Saharan Africa and ASEAN have also become increasingly important growth markets for Malaysian palm oil. In the first five months of 2026, both regions accounted for 36% of Malaysia’s total palm oil exports, compared with 25% five years earlier in 2022.

This export trend shows that Malaysia’s palm oil industry is becoming more diversified. Demand from traditional markets remains important, but stronger buying from Africa and ASEAN could help reduce reliance on a limited number of major buyers.

The global vegetable oil market is also being affected by movements in competing oils. MPOC said US soybean oil and rapeseed oil led price gains in the first half of 2026, rising 59% and 16% respectively since the start of the year.

The increase in US soybean oil prices was driven by American biofuel mandates and restrictions under the 45Z biofuel tax credit, which favours North American feedstocks. By comparison, South American soybean oil, sunflower oil and Malaysian palm oil rose more moderately, between 8% and 10%.

MPOC said the unusually high premium for US soybean oil since March 2026 has weakened its export competitiveness. US soybean oil exports dropped to just 11,000 tonnes in May 2026, the lowest level in 19 months.

This situation may indirectly support palm oil demand because global importers could look for more affordable and reliable alternatives. Malaysian palm oil may benefit if buyers shift sourcing away from high-priced competing vegetable oils.

Indonesia’s policy direction is another major factor supporting the palm oil price outlook. MPOC said Indonesia’s exportable palm oil supply is expected to tighten from late in the third quarter into the fourth quarter of 2026 due to the implementation of the B50 biodiesel policy in July, flat production and stronger early demand.

Oil World has projected Indonesia’s palm oil production to remain almost unchanged at 49.4 million tonnes in 2026. However, Indonesia’s combined exports and domestic use rose by 2.2 million tonnes, or 15%, in the first four months of the year.

This could push global importers to shift part of their demand toward Malaysia in search of more stable supply. If that happens, Malaysian producers and exporters may see stronger interest from international buyers.

Weather risk is also becoming a key concern. MPOC said the probability of a stronger El Nino developing from July or August is rising, although Malaysian and Indonesian palm plantations had not yet been affected as of June.

A strong El Nino can reduce rainfall and create drier conditions across Southeast Asia, Australia and India. However, MPOC said the impact on palm oil yield and production would usually only be visible after nine to 12 months.

This means the market may begin pricing in weather risks before the actual production impact appears. Traders often respond early to climate-related uncertainty because dry weather can affect future output and supply availability.

Despite the positive price outlook, MPOC warned that high vegetable oil inventories in major importing markets could limit further gains in crude palm oil prices. India’s vegetable oil stock reached a 17-month high of 2.2 million tonnes in May, while China’s vegetable oil stock rose to nearly 2.0 million tonnes, the highest level so far in 2026.

High inventories in India and China could slow near-term import demand, especially if buyers decide to use existing stocks before placing new orders. This could cap the upside for crude palm oil prices even if supply risks remain supportive.

MPOC also said biodiesel economics are less supportive because gasoil prices have fallen below palm oil prices in the futures market. This may reduce the incentive to use palm oil for biodiesel unless policy mandates continue to support demand.

the July outlook for crude palm oil remains positive but not without limits. Tighter supply in Indonesia, El Nino concerns and weaker competitiveness of US soybean oil are supporting prices, while high inventories in India and China may restrain stronger gains.

For Malaysia, the forecast range of RM4,400 to RM4,650 per tonne signals that palm oil prices may remain at relatively firm levels. This could help strengthen plantation sector earnings, support export value and provide better income prospects for producers.

the market will continue to watch several key factors: Indonesia’s B50 biodiesel rollout, weather conditions in Southeast Asia, demand from India and China, global vegetable oil inventories, and the direction of energy prices.

The development is suitable for Update News because it involves the latest crude palm oil price forecast, Malaysia’s export performance, global vegetable oil market trends and key supply risks affecting the palm oil industry.