Palm Oil Prices Steady Amid Projections of Tighter Supply Conditions in 2027

Crude palm oil (CPO) prices have been steady despite rising Malaysian inventories as market players focus on potential supply disruptions in 2027. Analysts expect tighter conditions due to strengthening El Niño weather, Indonesia's B50 biodiesel mandate, and competition from vegetable oils.

CPO has gained over 15% since the start of the year, with Malaysia's average price standing at RM4,493 per tonne last month - a 9.3% increase year on year. For the first seven months of 2026, CPO averaged RM4,388 per tonne.

Some industry players see further upside, including SD Guthrie (KL:SDG), which expects CPO to trade between RM4,600 and RM5,000 per tonne for the rest of the year. CIMB Securities' Ivy Ng Lee Fang notes that the market is seeing actual signs of El Niño effects on crops.

According to CIMB, inventories rose 3.3% month-on-month to 2.63 million tonnes in July - the highest in five months and up 24% year-over-year. Despite this, demand remains resilient, and palm oil has become increasingly competitive against rival vegetable oils.