On August 11, the Malaysian Palm Oil Board (MPOB) released its report showing that Malaysia’s palm kernel oil (PKO) production and inventories increased in July, confirming market expectations of higher output. However, Indonesia’s PKO supply remains relatively tight, with producers holding firm on prices. As a result, international PKO prices continued their upward trend.

As of August 19, Asia’s PKO CFR China price closed at USD 2,125/ton, up USD 145/ton or 7.32% from August 1. This rebound has completely offset the decline seen in the second quarter, surpassing the previous first-half peak of USD 2,100/ton and setting a new three-year high.

Looking ahead, PKO prices are expected to remain firm from late August to early September, fluctuating within the USD 2,000–2,200/ton range. On the supply side, Malaysia faces little immediate shipment pressure for palm oil and PKO. However, recent news that the Indonesian government is intensifying efforts to recover illegal oil palm plantations may raise concerns about tighter future supply. This outlook is likely to lend further support to Indonesian palm oil and PKO prices, making the overall supply-side impact neutral to slightly bullish.

On the demand side, key importing countries still have rigid demand in September and October, but the current high PKO prices may dampen buyers’ willingness to purchase aggressively, slowing the pace of procurement.

Overall, with tight supply fundamentals and continued bullish sentiment in the market, PKO prices are expected to maintain a steady-to-firm trend from late August to early September.