CPO Prices Surge on Supply Tightness and Festive Demand in India

Crude Palm Oil (CPO) prices have risen over the past week due to supply tightness and increased demand from India ahead of the festive season. As of September 1, CPO FOB Indonesia was $1.223/kg, up 1.33% from August 27's price of $1.207/kg. The CFR Mumbai benchmark, which reflects landed cost for Indian buyers, stood at $1.263/kg, a gain of 1.28% over the same period.

The year-on-year increase in both benchmarks is around 10%, with FOB Indonesia up 9.63% and CFR Mumbai 9.87% since September 2025. This indicates that the market has structurally repriced higher over the past twelve months, despite short-term fluctuations.

Several factors are driving the market higher, including seasonal supply tightening due to Indonesia's typical fourth-quarter decline in oil extraction rates. Indian buyers have also stepped up purchases ahead of the festive season, and sunflower oil availability is under pressure due to ongoing Black Sea trade disruptions tied to the Russia-Ukraine conflict.

Indonesia's continued push on mandatory biodiesel blending has absorbed a larger share of domestic CPO output for fuel use, tightening exportable surplus and providing a firm floor under crude palm oil pricing. Additionally, elevated crude oil prices tend to make biodiesel economics more attractive, reinforcing the incentive to divert palm oil into fuel blending.