Palm oil prices climbed last week even as crude oil kept falling, a sign the market is now taking its lead from biofuel policy and weather risk rather than energy. BMD crude palm oil rebounded to $1,110/mt from $1,089/mt a week earlier, while Brent slipped to $77.9 a barrel from $83 as US and Iran negotiations eased fears over the Strait of Hormuz.
Two things kept palm oil bid. Indonesia confirmed its B50 biodiesel mandate is on track to start on 1 July after positive fuel tests, with the allocated palm-based volume potentially running above the earlier estimate of 17.6 million kilolitres. At the same time, traders are watching El Niño: NOAA puts the probability of a strong event during November 2026 to January 2027 at 63%, which would rank among the largest on record. During the 2016 El Niño, Malaysian crude palm oil output fell 13.2% year-on-year, though MPOB notes any yield hit this time would only show up nine to twelve months out.
Supply, for now, is rising. MPOA reported 4.76% growth in Malaysian CPO production over the first 20 days of June, and shipments from both Malaysia and Indonesia jumped as exporters moved volume ahead of tighter Indonesian export controls.
The rest of the complex took its cue from palm. Soybean oil on CBOT dipped to 68.43 US cents/lb before rebounding to 69.56, supported by tight US biofuel feedstock supply. MATIF rapeseed eased then recovered to EUR 512/mt, with hot, dry EU weather raising late-season crop risk and MARS trimming its rapeseed yield forecast to 3.18 t/ha; rapeseed oil demand is expected to climb around 7% next season on biodiesel. Sunflower oil bucked the trend, easing to $1,490/mt as Oilworld lifted its global production forecast to 63.3 mmt on expanded Black Sea plantings.
Vesper’s outlook leans flat to firmer for palm through Q3, with biofuel mandates and El Niño risk offsetting the calmer energy picture, while harvest pressure could weigh on the soft oils later in the year.
For the full vegetable oils market analysis, visit: https://app.vespertool.com/market-analysis/3130?commodity=vegetable-oil
