Palm oil prices seen range-bound in February amid supply curbs, biodiesel policy clarity
21/01/2026 (New Strait Times), Kuala Lumpur - Palm oil prices in February are expected to remain range-bound between RM4,000 and RM4,300 per tonne, supported by seasonal declines in production and stock levels, the Malaysian Palm Oil Council (MPOC) said.
MPOC noted that crude palm oil (CPO) prices stayed firm above RM4,000 throughout January despite several fundamental headwinds, indicating that this level has become a near-term price floor with limited downside risk.
The council said a sustained price rally in palm oil and other vegetable oils would depend on key catalysts, including the gradual implementation of Indonesia's B45 biodiesel mandate, a rebound in crude oil prices, or clearer US biofuel policies that could lift soybean oil demand.
MPOC said that uncertainty over Indonesia's biodiesel policy has also eased after confirmation that the proposed B50 biodiesel programme will be postponed due to the current price relationship between palm oil and gas oil.
With the B50 plan temporarily off the table, market attention has shifted back to core fundamentals such as production trends, export performance and stock levels, it said in a statement.
MPOC said that seasonal factors are also likely to support prices. February's shorter trading month, combined with multiple public holidays like Thaipusam and Lunar New Year and also the fasting month, is expected to weigh on harvesting productivity and constrain near-term supply.
Against this backdrop, MPOC said global import demand for palm oil is expected to strengthen and could potentially surpass soybean oil demand in the first quarter of 2026 (Q1 FY26).
In January, soybean oil prices in Argentina rose to a two-year high, trading at a premium of US$140 per tonne over Malaysian RBD palm olein. In India's domestic market, soybean oil also commanded a premium of US$84 per tonne over palm oil.
"Despite palm oil's clear price advantage, India's import demand for palm oil has yet to fully recover, likely due to the recent weakening of the Indian rupee against the Malaysian ringgit. This setback should be viewed as temporary, as India will ultimately need to import palm oil regardless of currency movements, given its structural cost competitiveness.
"In addition, Indonesia's announced increase of the CPO export levy to 12.5 per cent from March 1, 2026, is expected to improve Malaysia's palm oil market share in India and contribute to a drawdown in domestic palm oil stocks," MPOC said in a statement.
At the same time, optimism is growing that US domestic soybean oil consumption will rise, supported by greater clarity on the 45Z biofuel policy and Renewable Volume Obligations (RVO) expected in early March. This should help absorb domestic soybean oil supplies and support crushing activity ahead of the large Brazilian soybean harvest between March and May 2026.
Brazilian soybean production is projected to exceed 180 million tonnes in 2026, up from an estimated 178 million tonnes in late 2025, supported by favourable weather conditions.