20/05/2026 (New Straits Times), Kuala Lumpur - Policy developments in the US biofuel sector, particularly measures aimed at increasing demand for biofuel feedstocks such as soybean oil, have enhanced palm oil's price competitiveness in key export markets and continued to support global demand.

Stronger demand for soybean oil in the United States, driven by expanding biodiesel and renewable fuel requirements, has contributed to firmer soybean oil prices, indirectly improving palm oil's attractiveness among global buyers.

According to the Malaysian Palm Oil Board (MPOB), palm oil continues to be the most competitively priced vegetable oil in India, while Malaysian palm olein is trading at a slight discount to Argentine soybean oil, a pricing advantage expected to sustain demand for palm oil in the near term.

In the first quarter of 2026, combined palm oil exports from Malaysia, Indonesia and Thailand increased by 1.9 million tonnes

However, the board expects the momentum to weaken between April and September, with industry analyst Oil World forecasting combined exports from the three producing countries to decline by two million tonnes in the second and third quarters, mainly due to lower shipments from Indonesia.

Malaysia's palm oil exports are projected to rise by 400,000 tonnes during the period, while Indonesia's exports are expected to fall by 1.7 million tonnes as more supply is diverted for domestic energy consumption.

As a result, MPOB said a significant build-up in palm oil inventories is unlikely during Southeast Asia's upcoming peak production season.

The board also maintained that vegetable oil prices still have room to trend higher, arguing that the recent correction was likely driven by funds and speculators taking profits.

"Supply risks also remain due to unresolved geopolitical tensions and rising El Niño risk, which could add uncertainty to global vegetable oil supply in the upcoming season," MPOB said.

The board noted that El Niño conditions typically bring drier-than-normal weather to Southeast Asia, reducing rainfall and soil moisture levels, which could potentially disrupt agricultural output across the region.

The Malaysian Meteorological Department expects El Niño conditions to emerge between June and July and potentially persist into early 2027.

Meanwhile, MPOB expects crude palm oil prices to remain stable at around RM4,400 per tonne in June, as global biofuel policies continue to strengthen demand for vegetable oils.

It said that Malaysia's palm oil inventories edged up marginally to 2.31 million tonnes in April, driven by a seasonal increase in output.

Palm oil production typically rises between March and October as drier weather conditions improve harvesting productivity and boost oil extraction rates from fresh fruit bunches.

Malaysia's cumulative palm oil exports climbed 25.5 per cent, or 1.1 million tonnes, to 5.38 million tonnes in the first four months of 2026, the highest level recorded since 2019. However, exports fell 14.3 per cent month-on-month in April to 1.3 million tonnes. Despite the monthly decline, exports remained firm, accounting for 80 per cent of Malaysia's palm oil production during the month.

In the global vegetable oil market, soybean oil prices in Europe surged to their highest level since November 2022 in mid-May, making it the most expensive major vegetable oil, supported by demand from the US biofuel sector. Soybean oil was trading at a premium of US$145 per tonne over rapeseed oil, US$110 per tonne over palm oil and US$45 per tonne above sunflower oil, making it the most expensive major vegetable oil globally.

https://www.nst.com.my/business/economy/2026/05/1443729/us-biofuel-policies-boost-palm-oil-competitiveness-support-cpo