CPO Prices Rise Ahead of Malaysia's 2027 Budget on Export Duty Waiver Expectations

Jakarta — Crude palm oil (CPO) prices strengthened in Indonesia and Malaysia on Thursday (Oct. 8, 2026), ahead of the tabling of Malaysia's Budget 2027 on Friday (Oct. 9). The reference CPO price set by PT Kharisma Pemasaran Bersama Nusantara (KPBN) Inacom was set at IDR 14,850 per kilogram, up IDR 225, or 1.54 percent, from IDR 14,625 per kilogram on Wednesday (Oct. 7).

The domestic gain tracked a broad advance in CPO futures on Bursa Malaysia Derivatives. According to Bernama, the October and November 2026 contracts each rose RM138 to RM4,448 and RM4,551 per tonne. The December 2026 contract gained RM137 to RM4,661 per tonne, January 2027 added RM131 to RM4,767 per tonne, February 2027 climbed RM115 to RM4,854 per tonne, and March 2027 rose RM91 to RM4,925 per tonne — the highest point along the futures curve. Trading activity also jumped: volume reached 160,977 lots, more than double the 70,612 lots recorded on Wednesday, while open interest rose to 333,864 contracts.

Export Duty Expectations and Indian Demand

The main driver was the expectation that Malaysia will propose a temporary exemption from CPO export duties in its 2027 Budget. According to Business Recorder, the market was supported by speculation that Malaysia may propose waiving export duties on crude palm oil in the budget session, making its exports more competitive with those of rival Indonesia.

Demand from India, the world's largest palm oil buyer, lent further support as the country absorbed large volumes in recent days, while logistics disruptions to sunflower oil from the Black Sea region stemming from the Russia–Ukraine conflict pushed India toward palm oil. Firmer crude oil prices also improved the economics of biodiesel, a longstanding source of CPO demand.

In the physical market, the October CPO price for southern Malaysia rose RM110 to RM4,460 per tonne. KPBN's tender, meanwhile, recorded CPO at IDR 14,850 per kilogram for Franco Dumai, IDR 14,600 per kilogram for FOB Talang Duku, and IDR 14,650 per kilogram for Franco Teluk Bayur, excluding VAT.

What It Means for Indonesia

The move carries direct weight for Indonesia. Palm oil is the main feedstock for biodiesel, and the CPO price is the key component of the biodiesel market index price (HIP) underpinning the mandatory B50 programme. For October 2026, the biodiesel HIP is set at IDR 15,072 per litre.

For the national palm oil industry, the prospect of a Malaysian CPO export duty waiver is worth watching. If realised, Malaysian CPO would become cheaper for global buyers and tighten competition with Indonesian CPO, which still carries an export levy. Market participants will now look to Malaysia's Budget 2027 announcement and the monthly supply-demand data from the Malaysian Palm Oil Board (MPOB) for the next price direction.