Malaysian Palm Oil Prices Capped by High Stocks Amid El Niño Outlook

Malaysian palm oil prices are likely to remain between RM4,500 and RM5,000 a tonne through December, despite expectations of lower production next year due to El Niño. According to top analyst Dorab Mistry, Malaysia's palm oil stocks will exceed three million tonnes by the end of this month, weighing on prices.

Mistry, director of Godrej International, said that higher stocks would cap prices despite the prospect of lower production in 2027. He noted that El Niño typically brings drier conditions to top palm oil producers Indonesia and Malaysia, which could curb production next year.

Rising energy prices due to geopolitical conflicts have boosted biodiesel demand, while Indonesia's new 50% biodiesel blending mandate is expected to tighten palm oil supplies and support prices. The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange fell 1.58% to RM4,537 at the midday break on Thursday.