InfoSAWIT, PETALING JAYA – Crude palm oil (CPO) prices are expected to remain at elevated levels over the coming months, supported by stronger energy prices, biodiesel demand and growing concerns over weather-related supply risks.
BIMB Research expects Malaysian CPO prices to remain firm over the next three months, although seasonal production increases and relatively high palm oil inventories could limit further gains. The research house also sees potential for prices to remain supported into 2027 if the delayed impact of El Niño tightens regional palm oil supplies.
BIMB Research maintains its CPO price forecast at RM4,400 per metric ton for 2026 and RM4,500 per ton for 2027. The research house also sees potential upside to those projections if supply conditions become tighter than currently anticipated.
The outlook comes as Malaysian CPO prices strengthened in August. Data from the Malaysian Palm Oil Board (MPOB) showed that the average CPO price reached RM4,549 per ton, up 1.2 percent from July and 5.1 percent from a year earlier. The August average was the highest monthly level since April despite weaker exports.
BIMB Research attributed the firm price environment largely to supply-side risks, increasing El Niño concerns and energy-related factors. Higher gas oil prices through August and early September also improved the economics of palm-based biodiesel.
The price gap between palm oil and gas oil widened to a US$315-per-ton discount for palm oil, compared with a five-year average premium of US$180 per ton. The shift could improve biodiesel economics and potentially support demand for palm oil.
Meanwhile, the average CPO price during the first eight months of 2026 stood at RM4,413 per ton, broadly in line with BIMB Research’s full-year forecast of RM4,400 per ton.
UOB Kay Hian Research also maintained its CPO price forecasts, projecting RM4,500 per ton for 2026 and RM4,400 per ton for 2027. The research house expects Malaysian palm oil production to peak in September and October, potentially pushing inventories close to three million tons by the end of September.
Weather remains another key factor. Malaysia recorded only 152 millimetres of rainfall in August, the lowest level so far this year, while parts of Peninsular Malaysia and Sarawak received below-average rainfall.
With seasonal production rising but weather and biodiesel demand providing support, the CPO market is expected to remain firm while traders closely monitor inventories, exports and the potential impact of El Niño on production. (T2)
