InfoSAWIT, KUALA LUMPUR – Crude palm oil (CPO) prices are expected to remain on an upward trajectory in 2026, supported by tighter short-term supply and rising energy-driven demand.
Reported by InfoSAWIT from Bernama, on Sunday (April 5, 2026), Hong Leong Investment Bank Bhd (HLIB) projects CPO prices to reach RM4,350 per tonne in 2026, an increase of RM150 from its previous forecast.
Prices are expected to peak at RM4,500–RM4,600 per tonne in the second quarter of 2026 before moderating in the second half of the year.
“Based on our estimates, every RM100 per tonne increase in CPO prices could boost plantation companies’ earnings by three to eight percent,” the firm stated.
HLIB attributed the near-term price strength to tighter supply conditions, while maintaining a long-term price projection of RM4,200 per tonne from 2027 as supply normalises.
Energy Link Strengthens CPO’s Role
Geopolitical tensions in West Asia have also significantly impacted the CPO market by driving up energy prices and disrupting global supply chains.
“Higher fertiliser costs may lead to crop switching toward soybeans, potentially capping price gains in the medium term. Meanwhile, logistics disruptions have added temporary price premiums,” the report noted.
HLIB emphasised that CPO is increasingly functioning as a substitute for crude oil. Rising oil prices improve biodiesel economics, boosting demand for vegetable oils.
“CPO is becoming a proxy for crude oil. Higher oil prices strengthen biodiesel economics, increase vegetable oil demand, and reinforce CPO’s role as an energy-linked commodity,” the firm added.
Biodiesel Policies as Key Catalyst
Meanwhile, RHB Investment Bank Bhd noted that CPO prices have surged approximately 19 percent since the onset of the West Asia conflict, with year-to-date averages reaching RM4,188 per tonne.
The rally has been driven by a 46 percent increase in crude oil prices and the expansion of global biofuel mandates.
“The most significant impact is likely the increase in biodiesel mandates in Indonesia and globally,” RHB stated.
In Malaysia, discussions around reinstating the B20 biodiesel mandate are gaining traction. The current B10 mandate consumes around 1.3–1.4 million tonnes of CPO, while B20 could double that demand.
“Some stakeholders believe B20 could be around 20 sen per litre cheaper than current diesel market prices,” the report noted.
With geopolitical tensions, energy dynamics, and biodiesel policies converging, CPO price prospects remain firm, although potential normalisation is expected as global supply conditions improve. (T2)
