KUALA LUMPUR, 21 January 2026 — 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. 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.
Against this backdrop, global import demand for palm oil is expected to strengthen, potentially surpassing soybean oil in Q1 2026. Soybean oil prices in Argentina reached a two-year high in January and traded at a premium of USD140 per tonne over Malaysian RBD palm olein. Similarly, in India’s domestic market, soybean oil commanded a premium of USD84 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 1st March 2026 is expected to improve Malaysia’s palm oil market share in India and contribute to a drawdown in domestic palm oil stocks.
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, optimism is building that U.S. domestic soybean oil consumption will increase, supported by greater clarity on the 45Z biofuel policy and Renewable Volume Obligations (RVO) 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 2026. 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, 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 U.S. biofuel policy that boosts soybean oil demand.
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Kartigha Ayamanny, Assistant Manager, Sustainability, Promotions and Communication
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About the Malaysian Palm Oil Council (MPOC)
The Malaysian Palm Oil Council (MPOC) is dedicated to promoting the global market expansion of Malaysian palm oil and its derivatives by enhancing its image and acceptance through technological innovation, economic value, and environmental sustainability. With a vision to position Malaysia as the world leader in certified sustainable palm oil, MPOC champions the Malaysian Sustainable Palm Oil (MSPO) certification as a benchmark for ethical and responsible production. Through a strategic network of international offices in key markets – including China, India, the Middle East, Africa, and ASEAN – MPOC actively engages stakeholders, opens new market opportunities, and strengthens the global presence of Malaysian palm oil. As a cornerstone of Malaysia’s economy, the palm oil industry contributed RM109 billion in export earnings in 2024, accounting for 24% of global production and 32% of exports. MPOC remains committed to driving sustainable growth and global leadership in the palm oil sector.
