Global palm oil prices seen surging on narrow production surplus
Tight supply-demand balance, El Nino and accelerating biodiesel programmes to sustain the uptrend, say analysts
Tightening production balance and a narrowing surplus in the upcoming 2026-27 season are expected to lift global palm oil prices, according to analysts. The narrowing surplus is due to a 3.5 percent decline in Malaysian production, alongside a 2.7 percent growth in consumption. This growth is primarily driven by Indonesia's expanding biodiesel program, which will divert more palm oil from the export market to domestic fuel use.
Researchers BMI, a part of Fitch Solutions, noted two supportive factors for the price surge - a robust Indian restocking ahead of the festive season and disruptions in the shipment of sunflower and soybean oils in the Black Sea. Intensifying El Nino weather conditions also pose a risk to production, adding another layer of price support.
The research firm raised its 2026 average price forecast for Malaysian palm oil futures to MYR4,453 per tonne, a 4 percent increase from the previous forecast of MYR4,300. This forecast is 4 percent higher than the 2025 average of MYR4,279 per tonne. BMI anticipates prices to average MYR4,550 per tonne this quarter and MYR4,582 in the following quarter.
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