Palm oil prices are gaining momentum as markets anticipate tighter global supplies, while Indonesia’s B50 biodiesel mandate is expected to increase domestic CPO consumption and reduce export availability.
PALMOILMAGAZINE, KUALA LUMPUR — Crude palm oil (CPO) futures on Bursa Malaysia Derivatives extended their rally on Thursday, August 20, 2026, reaching their highest level in around 20 months.
Stronger demand for biofuels, Indonesia’s implementation of its mandatory B50 biodiesel program, and growing concerns over potential production disruptions linked to intensifying El Niño conditions have provided key support for the market.
Also Read: Malaysian CPO Futures Rise, February 2027 Contract Tops RM5,000 per Tonne
According to Bloomberg, Malaysian palm oil futures surged as much as 1.7% to RM4,977 per metric ton during Thursday’s session. The level marked the highest intraday price since December 2024.
The rally comes as market participants increasingly price in the possibility of tighter global palm oil supplies. Indonesia, the world’s largest palm oil producer, is boosting domestic CPO consumption through its mandatory B50 biodiesel program.
The policy is expected to channel a larger share of palm oil into the domestic energy sector, potentially reducing supplies available for export and providing further support to global prices.
Also Read: KPBN CPO Price Jumps to IDR 15,925/kg as Malaysian Palm Oil Futures Extend Rally
Meanwhile, CPO prices at PT Kharisma Pemasaran Bersama Nusantara (KPBN) were set at IDR 15,925/kg on Thursday, August 20, 2026.
The KPBN price increased by IDR 170/kg, or approximately 1.08%, from the highest CPO bid of IDR 15,755/kg recorded on Wednesday, August 19.
Also Read: Indonesia Locks In 2026 B50 Biodiesel Quotas, Clearing the Way for Nationwide Rollout
The combination of stronger domestic biodiesel demand and potential weather-related production risks is strengthening expectations of a tighter palm oil balance, keeping both Indonesian and Malaysian CPO markets on an upward trajectory. (P3)
