Palm oil prices will average lower in 2026 due to higher supply and weak biofuel demand
A poll revealed that Malaysian crude palm futures prices are expected to be slightly lower than they were last year in 2026, due to a stronger supply by'major' producers and a subdued demand for biofuels.
According to 14 traders, analysts, and industry participants, the benchmark palm oil price will average 4,125 Ringgit per metric ton in 2018, down 2,55% from 2025.
The average CPO close price increased 2.54% from 4,128 to 4,233 Ringgit in 2025, thanks to Indonesia's mandatory B40 blend of biodiesel, which contains 40% of palm oil. This was despite the oversupply in the market.
Jakarta, Indonesia's biggest producer and exporter, originally planned to increase the mandate from B40 to B50 by 2026. However, due to funding and technical constraints, Jakarta scrapped this proposal earlier in the month.
The market was betting that prices would rise on the expectation that Indonesia will need more palm oil for biodiesel blends, said a New Delhi-based trader with a global trading house.
"But now that the demand for supplies has decreased, our focus is back on supplying."
The weather has helped to boost Malaysian palm oil stocks, which have reached their highest levels in seven years.
Anilkumar bagani, the head of research for Mumbai-based Sunvin Group, said that the volatility of palm oil prices in the first half 2026 will depend on the weather conditions in Southeast Asia and U.S. biofuel policy, as well as the South American soybean harvest.
Roslin Azmy hassan, CEO of the Malaysian Palm Oil Association, stated that palm oil prices have been competitive against soyoil since middle last year. This is expected to help support prices.
GAPKI (Indonesian Palm Oil Association) estimated that Jakarta crude palm oil production would reach 51 million tons in 2025, up from 48.16 million tonns the year before. The poll shows that Indonesia's production is projected to increase to 51.2 millions tons in 2026, an increase of 0.39%.
GAPKI Chairman?Eddy Martono stated that the output will likely increase in Indonesia, as newly planted company estates begin harvesting.
Malaysia's production is expected to decline marginally due to labour shortages and aging plantations. However, yields will likely remain above average.
Malaysia will?produce 19,75 million tons palm oil by 2026. This is a decrease of 2.61% compared to last year's record production of 20,28 million tons but above the average for 10 years of 19.05 millions tons.
Malaysian stocks have increased to 3,05 million tonnes from 1.7 millions tons a year ago.
(source: Reuters)
