Palm Oil Price Trend and Forecast 2026-2027

Key Takeaways

• Global crude palm oil prices registered a sharp Q2 2025 decline to USD 939/MT, the lowest quarterly average across the full 2025 period, before recovering to USD 997/MT in Q3 and holding near USD 999/MT in Q4 as a gradual stabilisation in supply-demand balances and recovering biodiesel blending support provided a price floor through the second half of the year.
• India, the world's largest palm oil importer, saw domestic CIF prices ease from approximately USD 1,060/MT in Q1 2025 to USD 1,040/MT in Q2 as government import duty adjustments and competition from soybean and sunflower oil alternatives pressured buying activity, before a festive season-driven demand recovery pushed prices into the USD 1,055/MT range in Q3.
• The Netherlands, as the primary European refining hub, recorded RBD palm oil prices of USD 1,367/MT in Q2 2025, reflecting the premium European buyers pay for refined material and EUDR-compliant certified supply, while Malaysian RBD palm oil prices firmed to USD 1,223/MT in Q3 before easing to USD 1,176/MT in Q4 as plantation output improved.
• North America recorded palm oil CFR Houston prices of approximately USD 1,079/MT in Q2 2025, reflecting subdued buying interest from food and personal care manufacturers amid mixed supply-demand signals, with logistics costs on Asia to US shipping lanes providing partial price support even as international benchmark prices softened.
• The palm oil market forecast for the remainder of 2026 is moderately constructive, with India restocking demand, Malaysian biodiesel mandate expansion to B15, recovering Chinese food processing sector procurement, and EUDR-driven European market restructuring expected to support global prices in the USD 970 to 1,100/MT CPO range.

What Is Palm Oil and Why Does It Matter?

Palm oil is a vegetable oil derived from the fleshy mesocarp of the fruit of the oil palm tree (Elaeis guineensis), originating in West Africa but now cultivated primarily in Malaysia and Indonesia. It is the world's most widely consumed vegetable oil, accounting for approximately 40 percent of global vegetable oil trade and around 36 percent of total vegetable oil production. Palm oil is available in multiple grades and processing levels: crude palm oil (CPO) is the primary traded commodity, refined, bleached, and deodorised (RBD) palm oil is the food-grade form used by food manufacturers, and various fractionated products including olein and stearin serve specific food and industrial applications.

From a commercial perspective, palm oil matters enormously because it is embedded in the global food system and, increasingly, the global energy system. It is used in a vast range of packaged food products including cooking oils, margarines, biscuits, instant noodles, and confectionery, as well as in personal care products and industrial lubricants. As a biodiesel feedstock, palm oil is central to the renewable energy mandates of Malaysia, Indonesia, India, and the EU, which collectively determine a significant share of global demand. Price movements in palm oil flow directly into food manufacturing costs, biodiesel economics, and oleochemical production margins across dozens of countries.

The global supply chain is overwhelmingly concentrated in Malaysia and Indonesia, which together account for approximately 85 to 88 percent of world palm oil exports. This concentration means that weather events, labour availability, government export policy including levy structures, and biodiesel mandate changes in those two countries have a disproportionate and immediate impact on world prices. India, China, and Europe are the three largest importing regions, and their buying patterns, government policies, and alternative vegetable oil price relationships are the primary demand-side variables that drive price volatility in international palm oil markets.

Which Sectors Are Driving Palm Oil Demand?

Food Manufacturing and Edible Oil: Food processing is the dominant end-use for palm oil globally, consuming the oil in cooking oil products, margarines and spreads, bakery fats, instant noodles, confectionery coatings, and as an emulsifier in a wide range of packaged food applications. The combination of a neutral flavour profile, excellent heat stability, semi-solid texture at ambient temperature, and low cost relative to alternative vegetable oils makes palm oil the default choice for many food formulation applications. Growing demand for processed and packaged foods across Asia Pacific, Africa, and the Middle East is a structural demand driver.

Biodiesel and Renewable Energy: Palm oil is a primary feedstock for biodiesel production across Malaysia, Indonesia, India, and increasingly in the European Union. Indonesian government biodiesel mandate requirements, which set minimum biodiesel blending ratios for domestic fuel consumption, consume a significant share of Indonesian palm oil production and directly influence export availability and global CPO prices. Malaysia's commitment to expanding its biodiesel mandate to B15 effective mid-2026 adds further demand from the domestic blending market. European sustainable aviation fuel demand is creating additional incremental demand for certified palm oil as a feedstock.

Personal Care and Oleochemicals: Palm oil and its oleochemical derivatives including fatty acids, fatty alcohols, and glycerol are used extensively in personal care product formulation. The oil's mid-chain fatty acid profile including palmitic and oleic acids makes it a versatile feedstock for emollient, emulsifier, and surfactant production. Growing personal care consumption in emerging markets and the shift toward bio-based ingredients in premium formulations support structural demand growth for certified sustainable palm oil in this application.

Animal Feed and Nutrition: Palm kernel expeller, a by-product of palm kernel oil extraction, is a significant livestock feed ingredient. Palm oil itself is used in higher-energy animal feed formulations and in fish feed for aquaculture. Growing livestock production in Southeast Asia and South Asia, combined with the expansion of commercial aquaculture, provides a structural demand base for palm oil by-products and derivative fractions.

Industrial Applications: Beyond food and biodiesel, palm oil is used as a lubricant, corrosion inhibitor, and process oil in various industrial applications. Palm oil-based metalworking fluids, hydraulic oils, and industrial lubricants have expanded as manufacturers seek to substitute petroleum-derived products with bio-based alternatives to meet ESG and regulatory requirements in European and North American markets.

Global Palm Oil Price Trend in 2025

Global crude palm oil prices in 2025, as measured by the International Monetary Fund primary commodity price benchmark, followed a distinct inverted-arch pattern. Prices opened the year at USD 1,051.50/MT in Q1 as supply conditions were broadly balanced and India import interest was active. The Q2 decline to USD 939.49/MT was the sharpest quarterly correction of the year, driven by a combination of improving Malaysian and Indonesian harvest output, softer Chinese buying, and Indian refiners shifting to cheaper alternative edible oils including soybean and sunflower as palm oil's competitive advantage narrowed.

The recovery to USD 997.32/MT in Q3 was supported by Malaysia's seasonal output moderation, India's festive season procurement driving imports to multi-month highs, and recovering biodiesel sector demand from Indonesia's expanded blending programme. Q4 2025 held essentially flat at USD 998.85/MT, suggesting the market found a near-term equilibrium. Q1 2026 showed early signs of a further modest recovery as Malaysia's B15 mandate announcement and recovering Chinese food processing procurement provided demand support against a supply backdrop that remained ample but not deeply oversupplied.

The 2025 price trajectory for crude palm oil was more volatile than many traders anticipated, with the Q2 correction of over USD 110/MT representing one of the sharpest quarterly declines in recent years. The equally sharp Q3 recovery demonstrated that the fundamental demand base for palm oil remains intact and that the Q2 weakness was primarily a cyclical supply-demand correction rather than a structural shift.

What Were India's Palm Oil Price Trends in 2025?

India is the world's largest importer of palm oil, consuming approximately 9 to 10 million tonnes annually across refined cooking oil, vanaspati, food manufacturing, and soap production applications. Indian CPO import prices at Nhava Sheva (Mumbai) are a key benchmark for Asian demand and are heavily influenced by government import duty policies, the competitive positioning of palm oil relative to soybean and sunflower oil, and the procurement behaviour of large domestic refiners. Import duty adjustments in 2025 created buying incentives that periodically shifted large procurement volumes, adding volatility above and beyond the global price cycle.

Indian CPO CIF prices tracked the global benchmark pattern broadly, declining from approximately USD 1,060/MT in Q1 to USD 1,040/MT in Q2 as government duty reductions made palm oil more attractive than rival oils but overall buying remained restrained in the face of adequate domestic inventory. Q3 2025 brought a meaningful recovery to around USD 1,055/MT as festive season cooking oil demand drove import volumes to a one-year high and freight rates added modest incremental cost. Q4 held near USD 1,080/MT on continued steady procurement, and Q1 2026 reached approximately USD 1,100/MT as forward buying ahead of the spring wedding season commenced.

India's palm oil procurement patterns are a critical variable in global price dynamics. When Indian buyers are active and drawing large import volumes, as in Q3 2025, their demand provides a tangible floor for Malaysian and Indonesian export prices. When Indian buyers switch to soybean or sunflower oil alternatives, as partially occurred in Q2 2025, the reduction in demand from the world's largest importer has a measurable softening effect on global benchmarks.

European Palm Oil Price Trends in 2025

European palm oil prices in 2025 operated in a structurally distinct context from other major importing regions, shaped by the EU Deforestation Regulation (EUDR) compliance requirements that added traceability cost burdens on importers, the premium for RSPO-certified sustainable palm oil sourcing, and strong refining capacity in the Netherlands and other Northern European hubs. European buyers predominantly import RBD palm oil rather than crude, with the Netherlands serving as the primary European refining and re-export hub. Rotterdam CIF prices therefore reflect a refined product premium above CPO benchmarks.

European palm oil prices, measured at Dutch RBD import levels, reached USD 1,367/MT in Q2 2025 even as global CPO benchmarks were at their yearly low, demonstrating how the EUDR compliance premium and refining value addition insulate European prices from the full extent of commodity market corrections. Q3 RBD prices firmed to approximately USD 1,350/MT as certified cargo availability tightened and Malaysian RBD palm oil export demand from Europe remained firm. Q4 and Q1 2026 reflected continued regulatory compliance cost embedding in European prices, with the RBD premium over global CPO holding substantially above pre-EUDR historical norms.

The European premium over global CPO benchmarks, which ran at 300 to 370 USD/MT through 2025, reflects both the cost of refining (CPO to RBD conversion) and the EUDR compliance and certification cost that European importers now build into their landed cost assessments. For European food manufacturers, this premium is structural and not expected to narrow significantly as long as EUDR enforcement continues to tighten.

North America Palm Oil Price Trends in 2025

North America is not a major palm oil producer but is a significant importer for food processing, personal care, and industrial applications. The US market imports primarily from Malaysia and Indonesia on a CIF basis, with Houston and Los Angeles serving as the main port entry points. North American prices track Malaysian and Indonesian FOB levels with an added freight and import cost premium. The US food processing sector's preference for domestic soybean oil and Canadian canola oil means palm oil serves primarily as a cost-driven substitute when its price discount to these alternatives is sufficiently wide.

North American palm oil CFR Houston prices showed a stable to slightly declining trend in Q2 2025, closing June at approximately USD 1,079/MT as the global CPO correction filtered through to import parity levels. The average Q2 decline of approximately 3.6 percent quarter-on-quarter reflected both the global price softening and subdued US food manufacturing procurement as buyers managed cautious inventory positions. Q3 2025 saw modest recovery to around USD 1,090/MT, and Q4 eased back slightly to USD 1,050/MT as year-end inventory destocking by food manufacturers reduced near-term buying urgency. Q1 2026 recovered to approximately USD 1,065/MT on improved biodiesel and food manufacturing sector procurement.

North American palm oil pricing is fundamentally driven by the price relationship between palm oil and domestic soybean oil. When palm oil's discount to soybean oil is wide, as in mid-2025, US food processors and biodiesel producers increase palm oil import volumes, providing demand support. When soybean oil becomes more competitive, palm oil import volumes shrink and prices face downward pressure from reduced buying interest.

What Factors Drove Palm Oil Costs in 2025?

• Malaysian and Indonesian harvest and production output. The primary supply variable for global palm oil prices is the combined production output of Malaysian and Indonesian oil palms, which together supply 85 to 88 percent of world exports. The Q2 2025 price decline was directly linked to improving harvest conditions and higher fresh fruit bunch yields in both countries as the effects of the prior year's weather disruptions faded. The Q3 recovery reflected seasonal output moderation in Malaysia, which is a recurring pattern in the second and third quarters.
• Indonesian biodiesel mandate and export policies. Indonesia's domestic biodiesel blending programme, which mandates minimum bio content in automotive and industrial diesel, consumes a significant and growing share of domestic palm oil production. Expansion of the mandate absorbs supply that would otherwise be available for export, creating a direct upward effect on global CPO prices. Export levy adjustments by the Indonesian government also periodically shift the competitiveness of Indonesian origin supply in international markets.
• Indian import duty policy and alternative oil competition. India's government periodically adjusts basic customs duty and agriculture infrastructure cess on edible oil imports to balance domestic consumer price pressures and farmer income protection. In 2025, duty adjustments that made palm oil more price-competitive relative to soybean and sunflower oil triggered periods of accelerated Indian buying that provided demand support for global prices. When palm oil lost its competitive discount advantage, Indian buyers temporarily switched to alternatives, reducing a key demand pillar.
• Chinese domestic food processing and stock levels. China is the second-largest palm oil importer globally, and its buying patterns are a significant price influence. Chinese Q1 2025 imports were solid, but Q2 sentiment became subdued as domestic consumption from food processors was constrained by seasonal factors and intense competition from soybean and sunflower oils. The Q3 recovery partially reflected Chinese restocking and recovering food processing sector activity.
• EUDR and sustainability certification premiums in Europe. The EU Deforestation Regulation enforcement created a compliance premium in the European market for certified, traceable palm oil supply. European importers increasingly required RSPO and country-of-origin traceability documentation, adding incremental sourcing costs that kept European prices elevated even when global CPO benchmarks were softening. This structural cost element is expected to persist and potentially widen as EUDR enforcement tightens.
• Alternative vegetable oil price relationships. Palm oil competes directly with soybean oil and sunflower oil for food processing and biodiesel applications across its key importing markets. The relative price competitiveness of palm oil versus these alternatives, influenced by South American soybean harvest outcomes and Black Sea sunflower supply, is a major determinant of switching behaviour among large edible oil buyers in India, China, and Europe.

Palm Oil Market Forecast for 2026

The palm oil market forecast for 2026 is moderately constructive relative to the 2025 average CPO price of approximately USD 997/MT. Several demand-side factors are expected to provide incremental support. Malaysia's expansion of its biodiesel mandate to B15 from B10 effective mid-2026 will consume additional domestic supply and tighten Malaysian export availability. Indian festive and wedding season procurement through Q2 and Q3 2026 is expected to remain robust. China's food processing sector recovery and restocking cycle should sustain import demand. EUDR-compliant European buying will continue adding a certification premium to regional prices.

On the supply side, Malaysian and Indonesian plantation output is expected to grow modestly as new planting matures, maintaining an ample supply backdrop that will cap significant price recovery. The risk scenarios include a La Nina or drought event disrupting Malaysian harvest, an aggressive expansion of Indonesian biodiesel mandates that absorbs more domestic supply, or a sharp escalation in soybean oil prices that makes palm oil relatively more attractive to buyers. The base case CPO range of USD 970 to 1,100/MT for 2026 reflects these balanced forces.

Expected Palm Oil Price Range (Remainder of 2026)

Key Analyst Insights for the Palm Oil Market

Palm oil is the most traded vegetable oil in the world and its price is influenced by a combination of agricultural production cycles, government policy levers in multiple countries simultaneously, and the behaviour of hundreds of millions of consumers across food and energy markets. Here is what buyers and sellers should be focused on through the remainder of 2026.

• The Malaysian B15 biodiesel mandate is the most important near-term supply tightener. Implementation from June 2026 will permanently redirect a meaningful volume of Malaysian palm oil from export markets to domestic blending, reducing available export supply and providing a structural floor under CPO prices that did not exist at the same intensity in prior years.
• Indian import duty policy is the most important near-term demand switch. India's government has shown willingness to adjust duties multiple times in recent years to balance consumer and farmer interests. Tracking the spread between CPO and domestic refined oil prices in India is the clearest early warning indicator for when duty adjustments are likely and how Indian buying behaviour will respond.
• Chinese food processing recovery is the key medium-term demand variable. Chinese edible oil consumption growth has been below trend since 2022 due to economic softness. Any meaningful acceleration in Chinese consumer goods spending and food manufacturing activity would translate into above-trend palm oil import volumes that would significantly tighten the global balance.
• EUDR enforcement creates a two-tier European market. Certified sustainable palm oil is trading at a growing premium over uncertified material in European markets. The premium for full traceability is structural and not expected to compress; European buyers should be treating the certified premium as a permanent cost element rather than a cyclical premium.
• Soybean oil remains the key substitute to watch. The price spread between palm oil and soybean oil is the primary driver of switching behaviour in India and China. South American soybean crop developments, particularly in Brazil and Argentina, are therefore a leading indicator for palm oil demand intensity. A good South American soybean harvest typically reduces palm oil's competitive advantage and softens import demand from both major buyers.
• The global edible oil balance is tighter than the CPO price alone suggests. Reduced production of sunflower oil from the Black Sea region, variable Argentine soybean crop years, and continued growth in global vegetable oil consumption collectively mean that the vegetable oil complex is less oversupplied than headline CPO numbers imply. This provides a structural support floor below USD 950 to 1,000/MT CPO that makes aggressive short positions in palm oil risky.

Key Takeaways for Buyers and Manufacturers

For Buyers

• Track the India import duty and levy schedule quarterly. Duty changes in India are among the most impactful near-term price signals available in the palm oil market, as they directly affect the procurement behaviour of the world's largest palm oil importer.
• European food manufacturers should complete EUDR compliance audits of their palm oil supply chains and establish long-term agreements with certified suppliers before compliance costs widen further in 2026 and beyond.
• Build coverage during Q2 and Q4 seasonality windows when Malaysian production is typically firmer and global prices are near-cyclical lows, rather than buying at Q3 peaks when Indian and Chinese restocking demand is most active.
• Biodiesel and biofuel buyers in Malaysia and Indonesia should model the impact of Malaysian B15 mandate implementation on domestic palm oil availability to assess whether alternative feedstocks or supplementary supply agreements are needed to meet blending obligations.

For Manufacturers

• Food manufacturers using palm oil in formulations should evaluate blend reformulation options that reduce palm oil dependency, both to manage EUDR compliance costs in European markets and to reduce exposure to the Indonesia-Malaysia supply concentration risk.
• Oleochemical and personal care manufacturers should build certified sustainable palm oil procurement programmes with RSPO or equivalent certification, as consumer brand owners are increasingly requiring certified ingredient sourcing in their supply chain sustainability reporting.
• Biodiesel producers in Southeast Asia should model the combined demand impact of Malaysian B15 and ongoing Indonesian B35 plus mandate scenarios to assess medium-term feedstock availability and develop hedging strategies for CPO cost exposure.
• Refiners in India should maintain competitive pricing relative to soybean and sunflower oil alternatives to retain market share during periods of high palm oil prices, as switching by large institutional buyers is rapid and can cause significant demand voids at short notice.