Crude palm oil (CPO) prices had seen a strong recovery since August 2019 after a lacklustre performance for two years as markets were anticipating a sharp decline in fresh fruit bunch (FFB) production due to prolonged dry weather and lack of fertiliser application by planters due to financial constraints. CPO futures gained 44% in 2019 and closed at a high of RM3,052 per tonne by end-2019. The gains could not sustain as CPO prices were clouded by a couple of headwinds, namely: i) plunge in oil prices; ii) signs of FFB production recovery; iii) declining palm oil exports due to a trade spat with the world largest consumer, India; and iv) mounting global concern over the Covid-19 outbreak. Based on the current palm oil-gas oil spread, it is unlikely to see discretionary blending activities as palm oil is trading at a steep premium level of US$196 (RM838.88) per tonne to gas oil prices. We expect to see minimal biodiesel exports this year while Indonesian and Malaysian governments might need to fork out more allocation to cover the shortfall if they want to push for B30 and B20 biodiesel programmes, respectively. Malaysian palm oil production in February recovered from the four monthly slides with an increase of 10.5% month-on-month (m-o-m) to 1.28 million tonnes. We expect to see further production recovery in the coming months. The improved production will help ease the tight supply condition in the market. The plantation industries and commodities minister said that the ministry has targeted to rebuild relations with the world’s largest consuming country, India. It is also looking to increase yields as well as expand its current oil palm planted area of 6 million hectares.