CPO Prices Surge Due to El Niño Effects; Next Week Will Be Decisive
Crude Palm Oil (CPO) prices strengthened at the end of the week after concerns regarding the impact of El Niño on production once again supported the market.
According to Refinitiv data, CPO prices closed at MYR 4,929 per tonne on Friday (4/9/2026). On a daily basis, prices rose by approximately 0.5%, while gaining about 0.8% over the week.
This strengthening allowed CPO to bounce back from the pressures of the previous week, despite prices remaining volatile throughout the trading period.
El Niño Shadows Production Once More
As reported by Business Recorder, the price increase was supported by concerns over medium-term production as El Niño conditions affect Malaysia and Indonesia. Drier weather could suppress palm oil yields if the phenomenon persists.
Energy sentiment also continues to provide support. Crude oil prices remain high amidst US-Iran conflicts and risks of supply disruptions in the Middle East. Higher oil prices tend to increase the attractiveness of palm oil as a feedstock for biodiesel.
High Stocks Remain a Burden
Nevertheless, the room for CPO price increases is not entirely open. Data from the Malaysian Palm Oil Board (MPOB) shows that Malaysian palm oil stocks in July rose by 3.32% to 2.63 million tonnes, the highest in several months. CPO production also increased by 9.41% to 1.79 million tonnes, even though exports rose by 14.5%.
This means that robust production ensures the market still faces a relatively large supply. This condition could restrain price rallies if export growth fails to keep pace with the increase in production.
Next Week Will Be Decisive
Market attention next week is also focused on the Malaysian Palm Oil Board (MPOB) monthly data on 10 September 2026, particularly the developments in Malaysian palm oil stocks and production during August, which could determine the next price direction.
If stocks begin to decline or production shows signs of pressure due to weather, CPO prices may have the opportunity to gain further momentum. Conversely, an increase in stocks could act as a barrier to prices, especially if export demand is not sufficiently strong.
Forest fires and haze in Kalimantan and Sarawak also represent additional risks that require close monitoring. Reuters reported that haze levels in Serian, Sarawak, have reached dangerous levels due to forest fires in the Indonesian region. However, so far, there has been no strong indication that these conditions have significantly disrupted palm oil production.