Crude palm oil prices to remain above $1,154 per ton for rest of 2026, MPOC says

MALAYSIA, 22 SEPTEMBER 2026 —

Crude palm oil prices are expected to remain above 4,700 ringgit ($1,154) per metric ton in October and through the rest of 2026, underpinned by weather uncertainties and favourable energy markets, the Malaysian Palm Oil Council said in a statement on Tuesday.

The council said the current high stock level is likely to be temporary, adding that production and stock levels in both Malaysia and Indonesia are expected to ease in the coming months. Inventories hit an eight-month high in August as production climbed to its highest level since December and exports declined, according to data from the Malaysian Palm Oil Board released early this month.

Dry weather associated with El Niño has become more pronounced across Malaysia and Indonesia since early August, raising concerns about its potential impact on palm oil production in six to nine months. Rainfall in Indonesia was around 20 per cent below average in July and 60 per cent below average in August, while Malaysia also experienced drier conditions, with rainfall around 30 per cent below average in August, MPOC said.

On energy markets, the council said biofuel blending margins further improved following the shutdown of Saudi Arabia's East-West pipeline facilities and shipping interruptions in the Strait of Hormuz and the Bab al-Mandab Strait. Those disruptions have supported vegetable oil demand for biofuel use, providing a floor for palm oil prices.

The key downside risks identified by MPOC are a decline in energy prices and a further build-up of stock, particularly as palm oil production typically reaches its seasonal peak in September or October. The council noted that the current high stock level is therefore likely to be temporary, with production and stock levels in both Malaysia and Indonesia expected to ease in the coming months.

Malaysian exports are projected to remain stable at around 16 million tons in 2027, according to MPOC projections. The council's outlook incorporates the lagged effect of the current dry spell, which could reduce fresh fruit bunch yields in the first half of 2027, offsetting the near-term inventory pressure from the seasonal production peak.

MPOC's assessment aligns with the Malaysian Palm Oil Board data showing August production at its highest since December, while exports declined during the same period, pushing stocks to an eight-month high. The combination of El Niño-driven weather concerns and energy market disruptions has created a supportive price environment despite the current inventory overhang.

The council did not provide a specific price forecast beyond stating prices would remain above the 4,700 ringgit threshold, nor did it quantify the expected production decline from the dry weather. The next MPOB monthly data release will offer further clarity on whether the seasonal peak has passed and if the anticipated stock drawdown has begun.

Related: Malaysian Palm Oil Council · Malaysian Palm Oil Board · Malaysia