The front of the palm oil curve and the back of it moved in opposite directions last week, which is the clearest signal in the market right now. Nearby BMD contracts slipped on profit taking and consolidation, with October settling at MYR 4,788/mt against MYR 4,859/mt a week earlier. The January 2027 contract went the other way, up to MYR 5,067/mt. The gap is a production risk being priced into next season rather than this one.
GAPKI is the reason. The Indonesian palm oil association said an extreme El Nino could reduce Indonesian CPO output by up to 3 million tonnes next season, above the 2 million tonnes cited by LSEG and the 2 million tonnes OilWorld applies globally. GAPKI added that domestic supply will be prioritised, which would show up as lower exports. MPOC takes a softer view for Malaysia, expecting the December monsoon to help mitigate the impact, though market sources still look for lower Malaysian production in 2027 too.
The near term reads differently. Malaysian stocks are expected to grow in August on rising production and weaker shipments, with surveyors reporting exports down 15% against July. Indonesia looks likely to end August with lower stocks on shipment data and market estimates, but not by enough to offset the Malaysian build. Indonesian exporters also have a new compliance regime to absorb, with the Danantara Sumberdaya Indonesia export monitoring platform launching on 1 September covering quantity, quality, pricing, destinations and payment terms. Nobody is sure yet how it will run.
Elsewhere the moves were policy driven. CBOT soybean oil for October rose to 70.83 cents/lb from 67.26 cents/lb on strong Brent and speculation about US biofuel policy, though the facts point the other way: the EPA granted small refinery exemptions totalling 1.76 billion renewable fuel credits for the 2025 compliance year, close to double what it first expected to exempt, and April 2026 biodiesel RIN generation of around 690 million credits sits well short of the roughly 915 million a month the mandate needs. MATIF rapeseed for November climbed to EUR 544/mt from EUR 522/mt after the EU Commission cut its 2026/27 production forecast by 0.4 million tonnes to 19.4 million and raised the import forecast by 0.7 million tonnes to 6.4 million. Sunflower oil was the one softer market, October crude easing to $1,430/mt from $1,450/mt as buyers wait on a possible Black Sea shipping arrangement that Turkey says it has prepared a plan for.
The lauric complex followed palm higher. Palm kernel oil CIF Rotterdam jumped to $2,205/mt from $2,035/mt on the GAPKI news, and crude coconut oil rose to $2,080/mt from $2,040/mt as copra supply slowed. Whether the El Nino premium at the back of the curve holds depends on rainfall in Malaysia and Indonesia over the next two quarters, and that is where Vesper’s quarterly outlooks part company with the machine learning trend.
