MPOC Forecasts CPO Prices to Remain Above RM4,700 Through End of 2026

The Malaysian Palm Oil Council (MPOC) predicts that crude palm oil (CPO) prices will remain above RM4,700 a tonne through the end of 2026, supported by weather-related supply risks and favourable energy markets.

The main downside risks to prices are a decline in energy prices and further stock accumulation, as palm oil production typically reaches its seasonal peak in September or October. Malaysia's palm oil output rose 1.4 per cent month-on-month to 1.81 million tonnes in August, supported by higher fresh fruit bunch collection and an improved oil extraction rate from July.

However, production remained below year-earlier levels for the sixth consecutive month, extending the year-on-year decline that began in March. Palm oil exports increased by 806,000 tonnes to 10.4 million tonnes in the first eight months of 2026, but August exports fell 7.5 per cent from July to 1.29 million tonnes.

The outlook for global vegetable oils was mixed in September, with Malaysian palm oil recording the strongest gain of 3.5 per cent, followed by Argentine soybean oil at 3.3 per cent. The sharp decline in sunflower oil prices was mainly due to increasing supply pressure as Ukraine and Russia entered their sunflower seed harvesting season in September.

Weather is emerging as a key risk to palm oil supply, with drier conditions associated with El Nino intensifying across Malaysia and Indonesia since early August. MPOC said the impact of weather conditions on palm oil production typically becomes evident six to nine months later, raising concerns over supplies in 2027.

Indonesia's rainfall was about 20 per cent below average in July and 60 per cent below average in August, while Malaysia recorded rainfall about 30 per cent below average last month. Oil World forecasts Indonesia's palm oil production to fall by 1.9 million tonnes in 2027, while Malaysian output is expected to decline by 0.7 million tonnes.

Energy markets are also providing additional support to palm oil prices, particularly through stronger biofuel economics. MPOC said the shutdown of Saudi Arabia's East-West pipeline facilities following an escalation in the conflict had added to supply concerns arising from shipping disruptions in the Strait of Hormuz and Bab al-Mandab Strait.