Palm Oil Price Trend Report and Forecast 2026-2027

Introduction: Why Palm Oil Matters

Palm oil is the world’s most widely consumed vegetable oil, used in an estimated half of all packaged products sold globally. The palm oil price trend serves as an important barometer of agricultural commodity markets, food inflation, and energy policy. Its extraordinary versatility, high yield per hectare, year-round production cycle, and functional properties-oxidative stability, semi-solid consistency, and neutral flavour-make it indispensable across food, oleochemical, and biofuel industries. Understanding the palm oil cost structure is critical for procurement planning across these value chains.

Sources: Expert Market Research, Palm Oil Pricing Report FY25; Procurement Resource; USDA Foreign Agricultural Service

Key Sectors Driving Palm Oil Demand

Food and Beverage: The food sector accounts for approximately 70% of total global palm oil consumption. Palm oil is a primary ingredient in processed foods, baked goods, instant noodles, margarine, and confectionery, with its functionality in high-temperature frying and emulsification ensuring continued dominance.

Oleochemicals and Personal Care: Palm oil derivatives-including fatty acids, glycerine, and palm kernel oil-form the backbone of the oleochemical industry, used extensively in soaps, detergents, cosmetics, and pharmaceuticals. Growing demand for bio-based chemicals has reinforced this segment as a stable, high-value consumer.

Biofuels and Renewable Energy: Indonesia’s B35 biodiesel mandate requires 35% palm oil-based biodiesel in transportation fuel, creating a large domestic demand pool that directly influences global supply availability and the palm oil price.

Animal Feed: Palm kernel expeller, a by-product of palm kernel oil extraction, is widely used in livestock and poultry feed across Europe and Southeast Asia, representing a consistent secondary demand channel.

Sources: Expert Market Research; Procurement Resource; GAPKI; MPOB

Global Palm Oil Market Overview

Indonesia and Malaysia collectively produce approximately 85% of the world’s palm oil, exerting disproportionate influence on global pricing. Indonesia’s biodiesel mandate, Malaysia’s export levy structure, and weather patterns driven by El Niño and La Niña cycles are among the most closely monitored variables in the palm oil market. Global production in FY25 remained broadly stable, supported by adequate rainfall and continued expansion of planted areas in Indonesia. The competitive dynamic between palm oil and substitute edible oils-particularly soybean, sunflower, and rapeseed oil-remained a key palm oil price driver throughout the year.

Sources: Expert Market Research; MPOB; GAPKI; Oil World Annual Report FY25

Global Palm Oil Price Trend FY25

Global palm oil prices showed significant volatility across FY25, with a sharp Q2 decline followed by Q3 recovery and a broadly flat Q4. The overall palm oil price trend from Q1 to Q4 reflected a net contraction as supply expansion from Southeast Asia and competitive pressure from substitute oils outweighed demand support.

What Drove Global Palm Oil Prices in FY25?

• Ample Southeast Asian Supply: Strong production output from Indonesia and Malaysia, favourable weather, and elevated fresh fruit bunch arrivals pushed inventories higher, driving the Q2 palm oil price decline.
• Substitute Oil Competition: Robust soybean oil supply from South America and recovering sunflower oil availability placed significant competitive pressure on palm oil prices, particularly in Europe and India.
• Biodiesel Policy Dynamics: Indonesia’s B35 mandate provided a structural consumption floor, but adjustments in biodiesel disbursements and crude oil price movements introduced periodic demand uncertainty.
• Food Processor Restocking: Renewed restocking by food manufacturers in Northeast Asia and North America, combined with festive season demand in India, supported the Q3 palm oil price recovery.

Sources: Procurement Resource; Expert Market Research; GAPKI; USDA FAS

Northeast Asia: Palm Oil Price Trends FY25

The palm oil cost in Northeast Asia rose as import volumes created inventory overhang in Q2, reducing procurement urgency. The Q3 recovery was driven by restocking from food processors. The palm oil forecast for this region points to Q1 FY26 stability, followed by renewed downward pressure through Q2–Q3 as seasonal production peaks elevate supply.

Sources: Expert Market Research; Procurement Resource; BMD

Southeast Asia: Palm Oil Price Trends FY25

The Southeast Asian palm oil market remained flat in H1 FY25, with smooth plantation operations and favourable weather keeping prices range-bound. Q3 saw an 8% increase driven by seasonal fresh fruit bunch production slowdowns, labour shortages, and rising export demand. Gains did not persist into Q4 as harvesting accelerated and supply normalised. The FY26 palm oil forecast mirrors the broader bearish trajectory, with stability in early FY26 followed by gradual correction through Q2–Q3.

Sources: Procurement Resource; Expert Market Research; MPOB; GAPKI

Europe: Palm Oil Price Trends FY25

European palm oil prices were shaped by stringent sustainability legislation and the EU Deforestation Regulation (EUDR). The modest Q2 uptick reflected restocking, while Q4 weakness reflected softening demand from both food and biofuel sectors. The palm oil forecast for Europe in FY26 anticipates brief Q1 stability before structural headwinds push prices lower through Q2–Q3.

Sources: Expert Market Research; Procurement Resource; European Commission EUDR Update FY25

India: Palm Oil Price Trends FY25

India, the world’s largest edible oil importer, saw palm oil account for 55–60% of total vegetable oil imports. The palm oil cost for Indian refiners declined through Q2–Q3 due to high import arrivals and weak food processing demand. Q4 recovered modestly on Diwali and wedding season buying. The FY26 palm oil price outlook anticipates Q1 stability, Q2–Q3 easing, and Q4 rebalancing.

Sources: Procurement Resource; Expert Market Research; SEA India; USDA FAS

North America: Palm Oil Price Trends FY25

North American palm oil prices experienced the sharpest regional volatility in FY25. The 11% Q2 decline reflected the highly elastic substitution dynamic with soybean oil. Prices recovered strongly in Q3–Q4 as industrial buyers returned and import costs firmed. The palm oil forecast for FY26 points to Q1 stability before correction from Q2 onwards.

Sources: Expert Market Research; Procurement Resource; USDA FAS

Palm Oil Market Outlook: FY26

The palm oil forecast for FY26 presents a broadly bearish trajectory, with near-term stability giving way to gradual correction:

• Q1 FY26 – Near-Term Stability: Palm oil prices expected to remain range-bound on short-cycle restocking and residual festive season support. Modest ~1.8% year-on-year increase projected.
• Q2–Q3 FY26 – Production Peak: Seasonal production peaks in Indonesia and Malaysia, combined with competitive soybean and rapeseed oil pressure, are forecast to drive prices materially lower.
• Q4 FY26 – Rebalancing: Market expected to find new equilibrium at lower levels as peak production transitions to seasonal slowdown. Net year-end decline of approximately 9.8% versus FY25 opening level.

Upside risks include El Niño-driven production disruptions, biodiesel mandate expansion (B35 to B40), India’s import duty changes, and EU sustainability regulations.

Sources: Procurement Resource; Expert Market Research; World Bank Commodity Markets Outlook; IMF

Key Takeaways for Buyers and Manufacturers

For Procurement Teams

• Q2–Q3 FY26 seasonal weakness creates optimal window for forward contract negotiations, particularly for large-volume food and oleochemical buyers.
• Monitor Indonesia’s biodiesel mandate closely. Any shift from B35 to B40 would tighten export supply and push the palm oil price higher across all import-dependent markets.
• Diversify sourcing across CPO, RBD palm olein, and palm kernel oil to optimise the palm oil cost across different end-use applications.

For Manufacturers

• The bearish FY26 palm oil price outlook provides margin relief for food processors, confectionery manufacturers, and oleochemical producers who can lock in lower input costs early.
• EU-facing manufacturers should accelerate EUDR compliance and RSPO/ISCC certification to maintain market access as sustainability requirements tighten.
• Palm oil’s substitution dynamics with soybean and sunflower oil require ongoing monitoring. Flexible formulation strategies can capture cost advantages when the palm oil market shifts.

Analyst Insights

The palm oil price trend in FY25 reflected a market navigating between supply abundance and intermittent demand recovery. Key structural dynamics include continued supply growth from Indonesia and Malaysia, the pace of Indonesia’s biodiesel expansion, intensifying substitution dynamics with soybean, sunflower, and rapeseed oils, EU deforestation regulations constraining European import volumes, and weather risk from El Niño or La Niña cycles that could disrupt the palm oil market supply outlook.

The palm oil cost environment in FY26 favours buyers, but structural demand drivers-biodiesel mandates, oleochemical growth, and sustained food consumption in Asia and Africa-provide a longer-term price floor that should prevent sustained collapse.

Sources: Procurement Resource; Expert Market Research; Oil World; Rabo Research; FAO

Palm Oil Specifications and Global Trade

Sources: Expert Market Research; Procurement Resource; GAPKI; MPOB; USDA FAS

Sources and References

1. Expert Market Research, Palm Oil Pricing Report FY25 Edition
2. Procurement Resource, Palm Oil Price Trend Report FY25
3. Indonesian Palm Oil Association (GAPKI), Production and Export Data FY25
4. Malaysian Palm Oil Board (MPOB), Monthly Supply and Demand Data FY25
5. Bursa Malaysia Derivatives Exchange (BMD), Crude Palm Oil Futures Data
6. USDA Foreign Agricultural Service, Oilseeds World Markets and Trade FY25
7. Oil World, Annual Report on Oilseed and Vegetable Oil Markets FY25
8. International Monetary Fund (IMF), Primary Commodity Prices Database
9. Food and Agriculture Organization (FAO), Food Price Index
10. Solvent Extractors’ Association of India (SEA), Import and Price Data FY25
11. European Commission, EU Deforestation Regulation (EUDR) Update FY25
12. Directorate General of Estate Crops, Indonesia, Biodiesel Programme B35
13. World Bank Commodity Markets Outlook, October FY25
14. Rabo Research, Agri Commodity Markets Outlook Q4 FY25
15. Refinitiv (LSEG), Palm Oil Commodity Price Data FY25–FY26