CPO prices ease as supply concerns fade; Malaysia and Indonesia output growth cap gains

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THE local crude palm oil (CPO) price delivery ended the month at RM4,215/Mt with an average price of RM4,412/Mt as earlier concerns over supply tightness eased.

Production growth in both Malaysia and Indonesia remained firm, supported by stable yields and improved mill operations, tempering further price upside.

Prices were firmer at the start of the month, hitting a high of RM4,346/Mt, before easing by -3.1% to RM4,215/Mt toward month-end.

“Looking ahead to October, we anticipate that the average CPO price to marginally lower by -4.4% to an average of RM4,220/Mt supported by strong production, weaker export performance and continuation of elevated closing stock levels,” said MBSB Research.

The price sentiment expected to taper off in tandem with astronomical of stock level. CPO output spiked to 2.04m tonne versus prior year, driven by stronger production eastern and peninsular estates, particularly Sarawak and Pahang and Johor.

Notably, the Oct’ fresh fruit bunch (FFB) yield improved by +16.0% year-on-year (yoy), bringing the accumulated yield rose to 14.45 tonne/ha (+3.5%yoy), thanks to the higher FFB delivered to mills fell to 10.4m tonne (+14.9%yoy).

The higher yield likely reflects an expansion in mature hectarage, while the increase in mill receipts was underpinned by stronger field productivity across all states, aided by drier weather conditions that facilitated harvesting and crop evacuation.

Meanwhile, total export volume declined -7.7% yoy, dragged by a steep contraction in crude-based products – particularly CPO (-31.6%) and CPKO (-68.1%) – suggesting lower spot purchases from traditional buyers such as India, China, and the EU amid narrow POGO spreads and ample alternative oil supplies (notably soybean and sunflower oil).

The weakness in crude exports also signals refiners’ cautious procurement approach due to margin compression and higher freight rates. Among refined and downstream products, performance was mixed.

Processed palm oil (PPO) held up relatively better, growing +8.0%yoy, likely benefiting from India’s import duty structure that favours refined products.

However, PPKO (-15.1%yoy), oleochemicals (-3.5%yoy), and biodiesel (-16.2%yoy) all registered declines, implying subdued industrial and biofuel demand amid elevated feedstock prices.

Similarly, palm kernel oil (-33.0%yoy) and palm kernel cake (-20.5%) continued to underperform, mirroring weaker lauric-oil demand in the oleochemical sector.

“Looking ahead, we maintain our Neutralcall on the sector with average CPO price of RM4,300/Mt and RM4,200/Mt for 2025 and 2026 respectively,” said MBSB.

The outlook remains hazy in between supply and demand dynamic, where shortage in PO might be coming by neighbour aggressiveness policy such as impending B50 implementation in the second half of 2026 by government of Indonesia.

Meanwhile, demand failed to gain traction despite widened spread discount between the soy bean oil, reflecting cautious sentiment.—Nov 11, 2025

Main image: Bloomberg

 

The post CPO prices ease as supply concerns fade; Malaysia and Indonesia output growth cap gains first appeared on Focus Malaysia.

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