Kuala lumpur: Crude palm oil (CPO) futures on Bursa Malaysia Derivatives experienced an upswing on Wednesday, driven by market speculation that Indonesia may increase its CPO export duty. The proposed hike aims to support the B50 biodiesel mandate, according to a trader.
According to BERNAMA News Agency, David Ng, a proprietary trader based in Kuala Lumpur with Iceberg X Sdn Bhd, highlighted that the market sentiment received an additional boost from the rising soybean oil prices on the Chicago Board of Trade (CBOT). Ng mentioned that the market is witnessing support above RM3,950 per tonne with resistance at RM4,250 per tonne. Rumors suggest that Indonesia might elevate its CPO export levy from 10 per cent to 15 per cent between February and March 2026 to fund B50 biodiesel subsidies before the mandate's implementation on July 1, 2026. This potential increase in export duty could render Malaysian CPO more affordable, potentially driving higher demand primarily from China and India.
Supporting Ng's insights, Anilkumar Bagani, the commodity research head at Mumbai-based Sunvin Group, noted that market traders are keeping a close watch on reports that Indonesian authorities are expected to convene by the weekend to discuss a potential five per cent increase in palm oil export levies. This adjustment is intended to support the forthcoming biodiesel mandate. Bagani emphasized that any rise in Indonesian palm oil export taxes would likely enhance the competitiveness of Malaysian palm oil exports.
Furthermore, Anilkumar pointed out that December 2025 palm oil production forecasts from the Malaysian Palm Oil Association (MPOA) and UOB Kay Hian suggest a slower rate of stock reduction than the general market consensus. The MPOA estimated a 4.64 per cent decline in Malaysia's December 2025 palm oil production, while UOB Kay Hian predicted a reduction of 2.0 per cent to 6.0 per cent, compared to market expectations of a 9.0 per cent to 9.5 per cent decrease. Consequently, projections of Malaysian palm oil December end stocks, ranging from 2.95 to 3.01 million tonnes, may need revision.
For the January 1-5, 2026 period, Anilkumar noted that the Southern Peninsular Palm Oil Millers Association (SPPOMA) estimated a nearly 35 per cent decrease in production compared to the December 1-5, 2025 period, indicating a production peak in late October 2025.
At the market close, the January 2026 contract rose RM32 to RM3,960 per tonne, February 2026 increased RM40 to RM4,013 per tonne, and March 2026 climbed RM43 to RM4,033 per tonne. The April 2026 contract edged up RM42 to RM4,042 per tonne, May 2026 strengthened RM41 to RM4,042 per tonne, and June 2026 gained RM40 to RM4,031 per tonne. Trading volume surged to 84,068 lots from 63,848 lots on Tuesday, while open interest fell to 251,439 contracts from 257,198 contracts previously. The physical CPO price for January South gained RM20 to RM4,000 per tonne.