Foreign media, January 21: The Malaysian Palm Oil Council (MPOC) stated on Wednesday that crude palm oil prices will remain within the range of RM4,000 to RM4,300 per tonne in February, influenced by seasonal declines in production and inventories.
On Wednesday, benchmark crude palm oil on the Malaysia Derivatives Exchange closed at RM4,154 per tonne.
Indonesia recently abandoned its B50 biodiesel mandatory blending policy for this year due to unfavorable palm oil-diesel price differentials. Although this is unfavorable for palm oil prices, crude palm oil prices have remained above RM4,000 so far this month, indicating that this level is forming a short-term support with limited downside risk. With Indonesia temporarily shelving the B50 plan, market focus has shifted back to key fundamental factors: palm oil production trends, export demand, and inventory levels.
Against this backdrop, MPOC forecasts that global palm oil import demand will increase in the near term and may surpass soybean oil demand by the first quarter of 2026, as palm oil regains its price advantage.
In Argentina, soybean oil prices rose to a two-year high in January, trading USD 140/ton higher than Malaysian refined palm oil. In India, domestic soybean oil prices also exceeded palm oil prices by USD 84/ton. However, the recent weakening of the Indian rupee against the Malaysian ringgit has prevented a full recovery in Indian import demand. MPOC views this as temporary, as India's reliance on palm oil demand persists due to its cost competitiveness.
Meanwhile, Indonesia plans to raise its crude palm oil export levy to 12.5% starting March 1, 2026. This move is expected to boost Malaysia's palm oil market share in India and help reduce Malaysian palm oil inventories.
Seasonal factors may also provide near-term price support. Fewer trading days in February, coupled with celebrations for the Lunar New Year and Ramadan, are expected to impact oil palm harvesting activities and constrain supply.
Externally, market optimism is growing over potential increases in U.S. domestic soybean oil consumption. This stems from expectations that the U.S. Environmental Protection Agency's policies regarding the 45Z biofuel tax credit and Renewable Fuel Obligation (RVO) will become clearer by early March. This could help absorb U.S. domestic soybean oil supplies and support soybean crushing margins ahead of Brazil's peak soybean harvest season from March to May. Brazil's 2026 soybean output is projected to exceed 180 million tons, up from 178 million tons in 2025.
MPOC added that sustained palm oil and other vegetable oil price gains would require Indonesia's gradual implementation of the B45 biodiesel mandatory blending policy, a rebound in crude oil prices, or clarity on U.S. biofuel policies to boost soybean oil demand.
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