Global palm oil prices are set to surge as the 2026-27 season starting in November brings a narrowing production surplus, analysts said. BMI, a research agency and unit of Fitch Solutions, raised its 2026 average price forecast for front-month Bursa Malaysia-listed crude palm oil (CPO) futures to MYR4,453 per tonne, up from the MYR4,300 forecast it had held since October 2025, according to a report by The Hindu BusinessLine.
That forecast is 4 per cent higher than the 2025 average of MYR4,279 per tonne. BMI expects prices to average MYR4,550 per tonne in the current quarter and MYR4,582 per tonne in the following quarter. On the Malaysia Derivatives Exchange, November palm oil futures were quoted at MYR4,884 per tonne, with spot prices at MYR4,946; palm oil has gained nearly 20 per cent this year. US-based Expert Market Research, quoting industry analysts, said prices are expected to remain firm and could top MYR6,000 (USD 1,500) per tonne.
Price outlook
| Benchmark | Price (MYR/tonne) | Context |
|---|---|---|
| 2025 average | 4,279 | BMI |
| 2026 average forecast | 4,453 | BMI, raised from MYR4,300 held since October 2025 |
| Current quarter | 4,550 | BMI forecast |
| Following quarter | 4,582 | BMI forecast |
| November futures | 4,884 | Malaysia Derivatives Exchange |
| Spot price | 4,946 | Current market |
Supply and demand balance
BMI expects global palm oil production to reach 81.4 million tonnes (mt) in the 2026-27 season, a marginal decline of 20,000 tonnes from 2025-26, while global consumption rises 2.7 per cent year-on-year to 79.9 mt.
Broadly flat global output, held back by a 3.5 per cent decline in Malaysian production, is set against consumption growth of 2.7 per cent, driven in large part by Indonesia’s accelerating biodiesel programme, which will divert additional palm from the export market into the domestic fuel pool.
— BMI, a unit of Fitch Solutions
As demand growth outpaces broadly flat supply, the global production surplus is expected to narrow from the 3.6 mt recorded in 2025-26, BMI said.
| Metric | 2026-27 forecast | Year-on-year |
|---|---|---|
| Global production | 81.4 mt | -20,000 tonnes |
| Global consumption | 79.9 mt | +2.7% |
| 2025-26 surplus | 3.6 mt | — |
Biodiesel mandates reshape export flows
Indonesia, the world’s largest palm oil producer, implemented a B50 biodiesel programme with a 50 per cent palm oil blend on July 1 — the first country to adopt such a biofuel blend, the report said. Expert Market Research quoted analysts saying Indonesia’s planned mandatory B50 blending is expected to boost domestic consumption of palm oil feedstock and potentially reduce export availability.
Dutch multinational financial services firm Rabobank said global palm oil prices will remain elevated between 2026 and 2031, driven by rising food demand, expanding biodiesel use across South-East Asia, and limited replanting of oil palm in Indonesia and Malaysia. "Although global palm oil production is expected to increase over this period, total output is still likely to fall short of demand," it said. Biodiesel mandates — Indonesia’s B50, Malaysia’s B15, and Thailand’s push for B20 in addition to its B7 — will further constrain export availability and tighten global supply, Rabobank said.
Risks to the price outlook
Two near-term factors are supporting prices: robust Indian restocking ahead of the festive season and disruption of shipments — mainly sunflower and soybean oils — in the Black Sea, BMI said. Intensifying El Nino weather conditions add a further layer of price support and introduce a production risk, and BMI expects this to continue into the first quarter of 2027.
Expert Market Research said the main upside risk is a combination of the B50 mandate reducing export availability and El Nino weather disruptions curbing production simultaneously, which could push prices toward or beyond the MYR6,000 level. The main downside risk is a smoother-than-expected seasonal production peak in Indonesia and Malaysia combined with continued competitive pressure from soybean and rapeseed oil, capping the pace of any recovery.
Sourcing implications
Rabobank said palm oil buyers may face ongoing sourcing challenges, while producers are likely to benefit from sustained price strength. Buyers will need to adopt strategic procurement approaches to manage risk and secure long-term supply, the bank said.
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