The Malaysian Palm Oil Council (MPOC) has issued a statement predicting that crude palm oil (CPO) prices will remain steady at RM4,400 per tonne in June, despite looming weather risks and uncertain trade flows. This forecast comes as a result of ongoing geopolitical tensions and the potential emergence of El Niño conditions, which could significantly impact vegetable oil output in the upcoming season.
MPOC's statement highlights the elevated supply risks associated with these factors. El Niño typically brings drier-than-normal weather to Southeast Asia, reducing rainfall and soil moisture, and potentially affecting agricultural supply. The Malaysian Meteorological Department (MET) expects El Niño conditions to develop between June and July and potentially persist into early 2027.
Despite these challenges, MPOC notes that palm oil competitiveness has improved due to developments in the US biofuel sector. Soybean oil prices in Europe have climbed to their highest levels since November 2022 in mid-May, making it the most expensive major vegetable oil. During this period, soybean oil traded at a premium of US$145 per tonne over rapeseed oil, US$110 per tonne over palm oil, and US$45 per tonne over sunflower oil in the global market.
However, MPOC emphasizes that palm oil remains the most competitively priced vegetable oil in India, while Malaysian palm olein is trading at a slight discount to Argentine soybean oil, which could support demand. Malaysia's palm oil stocks rose marginally to 2.31 million tonnes in April, supported by seasonal production gains and improved harvesting conditions.
Exports from January to April 2026 increased by 25.5% year-on-year, or 1.1 million tonnes, to 5.38 million tonnes, the highest since 2019. However, exports declined by 14.3% month-on-month in April to 1.30 million tonnes, still accounting for 80% of Malaysia's palm oil production for the month. Combined palm oil exports from Malaysia, Indonesia, and Thailand rose by 1.9 million tonnes in the first quarter of 2026, but MPOC expects this trend to reverse between April and September.
According to Oil World projections, combined exports from the three countries are expected to fall by two million tonnes in the second and third quarters, mainly due to lower Indonesian shipments as more palm oil is redirected towards domestic energy use. Malaysia's exports are projected to rise by 400,000 tonnes over the same period, while Indonesia's exports are expected to decline by 1.7 million tonnes. As a result, a sharp build-up in regional palm oil stocks is not expected during the peak production season.
The US Department of Agriculture (USDA) has projected record-high global oilseed production for the 2026/2027 season. Soybean output is expected to rise by 14 million tonnes, sunflower seed by seven million tonnes, and rapeseed by 1.4 million tonnes. Collectively, production of the three major oilseeds is forecast to increase by 4%, or 22.4 million tonnes, to a record 600 million tonnes.
In conclusion, the MPOC's forecast highlights the complex interplay between weather, geopolitical tensions, and market dynamics in the palm oil industry. While El Niño conditions and supply risks pose challenges, improved competitiveness and record-high global oilseed production suggest that the industry may be poised for a period of adjustment and potential growth.
