Malaysian palm oil seen at RM4,400-4,650 in August as Indonesia’s B50 mandate supports prices

B50 mandate and energy markets support prices

Malaysian crude palm oil is expected to trade between RM4,400 and RM4,650 per tonne in August, supported by Indonesia’s implementation of its B50 biodiesel mandate from July, according to the Malaysian Palm Oil Council. MPOC also cited stronger energy markets and an improving economic case for biodiesel as factors underpinning its forecast.

Indonesia’s mandate raises the biodiesel blend to 50%, increasing the amount of palm oil directed toward domestic fuel production. As Indonesia is a major palm oil producer, greater use by its energy sector can reduce the volume available to the wider vegetable oil market and influence price expectations in Malaysia and other trading centres.

Energy prices provided an additional source of support in July. MPOC said renewed tensions between the United States and Iran drove gasoil prices up 30% between early and mid-July. The increase made gasoil more expensive than palm oil and soybean oil, improving the relative economics of using vegetable oils in biodiesel.

High stocks and weak demand cap the upside

MPOC nevertheless expects the increase in palm oil prices to remain limited. Demand is still slow, while inventories of vegetable oils remain high in major global markets. These conditions leave buyers with sufficient supply and reduce the likelihood that energy-market strength alone will generate a sustained price surge.

Malaysia’s near-term supply outlook also remains positive. Data from the Malaysian Palm Oil Board showed stable production during the first half of 2026, while national palm oil stocks rose to 2.5 million tonnes in June. The inventory level gives the market a buffer even as Indonesia channels more palm oil into biodiesel.

Malaysian production increased 8% from May to 1.63 million tonnes in June, in line with the seasonal upcycle that generally begins in March, MPOC said. However, output was still 3% below June 2025, marking the fourth consecutive month of year-on-year decline. The figures indicate that seasonal supply is recovering, but production has yet to return to the previous year’s level.

Exports rise monthly but trail last year

Malaysia’s palm oil exports increased 6.1% from May to 1.20 million tonnes in June. Despite that monthly improvement, shipments remained 4% below the corresponding period a year earlier. MPOC attributed the weaker annual performance to low consumption of oils and fats in major markets including China and India, amid the continuing effects of conflict in West Asia.

MPOC said palm oil remains the most price-competitive major vegetable oil and is therefore positioned to benefit from demand ahead of Deepavali. For producers and traders, the August outlook reflects two opposing forces: Indonesia’s B50 programme and stronger fuel prices support the market, while Malaysia’s 2.5-million-tonne stockpile and restrained consumption in key Asian destinations limit the potential advance.