KUALA LUMPUR, 22 September 2025 — The Malaysian Palm Oil Council (MPOC) is forecasting that crude palm oil (CPO) prices will trade in the range of RM4,200 to RM4,500 per tonne in the coming weeks, sustained by supply uncertainties in the global vegetable oils market and easing inventories ahead of seasonal production declines. This outlook comes at a time when Malaysia’s palm oil stocks have reached their highest since January 2024, and traders remain cautious despite recent price strength.
In August, Malaysia produced 1.85 million tonnes of palm oil, an increase of about 43,000 tonnes (2.4% month-on-month) driven by higher output in Sabah and Sarawak. Output in the Peninsular, however, began to decline after peaking in July. Exports for the month were largely unchanged from July, at 1.32 million tonnes.
Inventories rose to approximately 2.20 million tonnes, marking the highest level in over a year. Despite this stock build-up, the MPOC believes price support will come from tighter supply for key vegetable oils globally, particularly if biodiesel mandates in countries such as Indonesia are increased. The projection counts on demand from major consuming markets, plus uncertainties linked to soybean oil output in the US and Brazil.
What’s Behind the Outlook
The forecast is underpinned by several interlocking supply-side factors. First, the seasonal lull in production anticipated in Peninsular Malaysia from November could relieve some pressure on inventory, helping stabilize or support prices. MPOC also pointed to Indonesia’s exportable palm oil potentially being curtailed if it raises its biodiesel mandate to B50, thereby limiting global supply.
Meanwhile, the global vegetable oil complex is experiencing tightening supply: soybean oil production growth is expected to slow sharply for the 2025/26 season as U.S. and Argentine farmers shift acreage toward more profitable crops. This could reduce stocks accumulation and uphold price levels for substitutes like palm oil.
On the demand side, though prospects are mixed, some markets are still seen as supportive. Physical demand from major buyers in Asia-Pacific, the Middle East, Sub-Saharan Africa and the EU, among others, helps cushion the impact of weaker demand in the Americas and South Asia. However, weak demand from some key markets is expected to act as a cap on upside potential.
Implications for Investors and Key Stakeholders
For those invested in the palm oil sector—including growers, refiners, exporters, and commodity traders—the current outlook offers both reassurance and caveats. The RM4,200-RM4,500 range suggests that margins may improve or at least remain stable for producers who can manage cost inputs well. Those operating downstream (refineries, biofuel producers) may need to watch out for raw material price moves, especially as supply tightness could drive input costs upward.
Exporters could benefit if global demand holds and export restrictions or mandates in other nations tighten. But there is also exposure to risk: currency movements (ringgit‐USD), changes in biodiesel policy (especially in neighbouring Indonesia), fluctuations in crude oil (which influences biodiesel economics), and possible demand shocks from major consuming economies.
Outlook
Looking ahead, inventory levels are expected to peak in October, then gradually ease once the seasonal production decline in Peninsular Malaysia takes full effect in November. These developments could reinforce price support, provided that international demand does not weaken further. Key policy shifts, especially biodiesel blending mandates in major producer or consumer countries, will also be closely watched.
If demand remains firm and supply constraints tighten as expected, palm oil prices may continue to trade towards or even occasionally above RM4,500, though if demand dips or policies change unfavourably, downside risks are real.
