Executive Summary

 

 

Price and Margin Snapshot

Physical offers for RBD palm olein free on board (FOB) Malaysia spent most of July anchored between USD 1,010 and 1,025 per t, showing little change from June even as CPO futures edged higher. Inter‑month spreads on Bursa Malaysia’s dollar‑denominated FPOL contract remained active; however, outright prices were capped by steady refinery throughput and comfortable pipeline stocks.

 

Benchmark CPO for September 2025 delivery hovered just above 4,200 ringgit per t at month‑end, a nine‑week high that lifted gross refining margins but raised import costs for price‑sensitive destinations. The olein–CPO differential averaged USD 60 per t, slightly wider than the three‑year mean of USD 55 per t and broadly acceptable against current energy and hydrogenation expenses.

 

Soft‑oil premiums continue to support olein’s competitiveness. Chicago soyoil still lands in Asia about USD 230 per t higher than olein, while sunflower oil commands an even steeper differential. These spreads help keep olein embedded in mainstream frying applications that demand oxidative stability and long fry life.

 

Demand and Trade Dynamics

India remained the chief source of near‑term volatility. After futures rallied six percent in three sessions early in the month, at least 65,000 t of July–September CPO cargoes were reportedly canceled as local refiners protected margins. Two weeks later, news of a 150,000 t Chinese soyoil purchase for September–December arrival further clouded short‑run demand signals. Market participants stress that India routinely arbitrages small price gaps between oils and that olein volumes generally rise ahead of the August‑October festival frying season.

 

Seasonal factors look benign. Monsoon rainfall is tracking slightly above the 30‑year norm, and the approaching late‑August “break” should let discharge ports clear July congestion. In China, the state reserves agency plans to tender for 80,000 t of refined palm products in August. If awarded as a single tranche, the move could pull prompt supplies out of the spot market and widen nearby spreads.

 

Elsewhere, steady buying from Pakistan, Bangladesh, and the Middle East has offset some Indian softness. These markets favor olein’s competitive landed cost and fast discharge times in flexitanks and parcel tankers.

 

Logistics and Policy Watch

Freight remains the largest single headwind. Vessels continue to skirt the Red Sea, adding 10–14 days to Asia‑Europe voyages. The Freightos Baltic Daily Index places Asia–North Europe container rates near USD 3,560 per FEU, roughly four times the year‑ago average. Bulk liquid carriers quote surcharges of USD 18–22 per t between prompt and three‑month forward positions to the eastern Mediterranean. Even though olein ships mainly in flexitanks and small parcels, the ripple effect of scarce capacity and longer rotations is felt across all vessel classes.

 

On the policy side, Indonesia is reviewing its combined levy‑tax package as domestic cooking‑oil subsidies expire in September. Any reduction could shrink the typical USD 20 per t FOB gap between Indonesian and Malaysian olein, potentially redirecting spot demand. Jakarta has also extended its domestic market obligation at a 1 : 6 ratio through August, keeping crude flows relatively loose.

 

Currency moves offer partial relief. The Malaysian ringgit slipped about two percent against the U.S. dollar in July, cushioning FOB offers and helping Asian buyers stay engaged despite high freight. Most price desks therefore retain a near‑term USD 980 to 1,040 per t trading band, with direction likely steered by Indian tenders and any surprise shifts in soft‑oil differentials rather than fundamental changes in global balances.