InfoSAWIT, KUALA LUMPUR — Crude palm oil (CPO) prices are projected to weaken in 2026 as weather conditions improve, crop yields increase, and global production normalizes. The outlook was presented by MARC Ratings in its report released on Thursday (4/12).

The rating agency stated that CPO prices are unlikely to return to the highs seen in late 2024 and early 2025. MARC forecasts next year’s CPO price to hover between RM 3,850 and RM 4,250 per ton, lower than the estimated 2025 average of RM 4,300 per ton.

MARC added that any potential price increase may only occur if government intervention—particularly from Indonesia—boosts biodiesel demand.

Currently, CPO prices have fallen more than 10% from the 2025 peak of RM 4,603 per ton. Three-month CPO futures recently traded around RM 4,120 on the Bursa Malaysia Derivatives Exchange.

MARC Ratings cited projections from the United States Department of Agriculture (USDA), which indicate that global palm oil consumption will continue to rise, although demand is expected to remain slightly below total production.

India, the world’s largest importer, is expected to maintain strong buying interest due to palm oil’s competitive pricing compared with soybean oil and sunflower oil.

The Food and Agriculture Organization (FAO) also projects a 2.1% increase in global vegetable oil use in 2026, driven largely by the biofuel sector.

As for competing vegetable oils, production is expected to deliver mixed results. Global soybean output is forecast to rise—especially from Brazil, the world’s largest producer—while harvests in the United States and Argentina are projected to decline slightly.

Meanwhile, rapeseed production prospects in Canada and Europe remain constrained by rainfall levels still below historical averages, which may slow yield recovery.

“With the mixed supply outlook across substitute oils, CPO prices will likely remain under pressure and struggle to revisit the peak levels recorded in late 2024 to early 2025,” MARC Ratings wrote. (T2)