InfoSAWIT, KUALA LUMPUR – Crude palm oil (CPO) prices are projected to remain around RM4,500 per ton in the near term, supported by improving biodiesel margins, stronger global crude oil prices, and the potential emergence of El Niño conditions that could affect regional palm oil production.
The outlook was presented by the Malaysian Palm Oil Council (MPOC), which believes the combination of energy market dynamics and weather conditions will remain key catalysts for CPO price movements throughout the second half of 2026.
Nevertheless, upside potential is expected to remain limited due to weaker export demand caused by global inflationary pressures, slower economic growth in key markets, and the possibility of rising inventories as production enters its seasonal peak.
According to MPOC data, Malaysia’s palm oil stocks in March 2026 fell 16.1% to 2.26 million tons, after exports surged to 1.55 million tons, exceeding monthly production of around 1.37 million tons.
“The increase in first-quarter exports was mainly driven by accelerated shipments ahead of higher logistics costs, coupled with slower Indonesian exports following a pre-emptive shipping surge before export levy hikes,” MPOC said in an official statement.
Despite global economic headwinds, palm oil exports in Q1 2026 increased 29.1% year-on-year, equivalent to an additional 927,000 tons. Growth was recorded in nearly all regions except the Americas.
Key export growth figures included:
- North Africa: +94%
- South Asia: +74%
- Other European and Central Asian markets: +47%
- Asia-Pacific: +24%
- Sub-Saharan Africa: +20%
- Middle East: +8%
- European Union: +1%
Meanwhile, escalating conflict in the Middle East since late February has contributed to volatility in global vegetable oil markets.
By mid-April, palm oil and U.S. soybean oil prices had risen 15–16%, significantly outperforming sunflower oil, rapeseed oil, and Argentine soybean oil, which gained only 2–5%.
According to MPOC, palm oil is among the commodities benefiting most from expanding biodiesel mandates in various countries, as elevated energy prices make biofuel blending increasingly competitive.
Domestic demand in Southeast Asia is also expected to provide fresh support.
MPOC estimates additional regional consumption could absorb 1 million to 1.5 million tons of palm oil in the second half of 2026.
- In Malaysia, implementation of the B15 biodiesel mandate is expected to require an additional 300,000 tons of CPO annually.
- In Indonesia, full implementation of B50 biodiesel could absorb up to 3 million additional tons per year, although realization will depend on biodiesel industry capacity.
On the supply side, MPOC also highlighted dry weather risks as another supportive factor for prices.
Lower rainfall since mid-March, combined with forecasts for continued dry weather through June from Malaysian meteorological authorities, could disrupt production and tighten global supplies.
With rising biodiesel demand, elevated energy prices, and weather-related production risks, the market believes CPO prices have a strong foundation to remain at premium levels—although export challenges and seasonal output increases will continue to act as balancing forces. (T2)
