CPO Prices Set for Mid-Year Surge on Rising Geopolitical Tensions
Crude palm oil (CPO) prices are expected to rise in the second half of 2026 due to increasing supply risks, analysts say. Rising geopolitical tensions and a strengthening El Niño have left analysts predicting CPO prices will trade above RM4,000 per tonne for the remainder of the year.
CIMB Securities expects CPO prices to reach between RM4,400 and RM4,600 per tonne in the near term, supported by rising geopolitical risks and higher biodiesel demand in Indonesia. The research house notes that falling exports of sunflower oil due to Russia and Ukrainian cargo strikes could support substitution demand for palm oil.
Conversely, CIMB warns that stronger El Niño conditions beginning in October could reduce oil palm yields and production in Southeast Asia, posing greater downside risks to supply from 2027 onwards. The analysts have raised their 2026 CPO price forecasts by RM50 per tonne to RM4,450 per tonne.
Indonesia's B50 biodiesel mandate is expected to support CPO demand globally, as the US Department of Agriculture cut Indonesian palm oil production forecasts for 2026-2027 due to drought expectations. Public Investment Bank expects an average CPO price of RM4,400 per tonne for 2026-2027.
However, concerns over high inventory levels capping further price upsides have grown, according to TA Securities. The company notes that Malaysia's CPO stockpiles beat market expectations with a high of 2.63 million tonnes in July, mainly due to higher production and lower domestic usage.