Four Key Factors That Could Affect Crude Palm Oil Outlook in 2026

RHB Investment Bank maintained its neutral call on the plantation sector for 2026, noting that crude palm oil prices are expected to average slightly lower year on year amid a more balanced global supply and demand outlook.

The research house highlighted that geopolitical tensions and policy changes can still create volatility, but the underlying fundamentals point to a more stable market.

Its preferred stock picks include Johor Plantations Group, Sarawak Oil Palms, IOI Corporation, and SD Guthrie.

The bank identified four main factors shaping the outlook:

• La Niña: The weak La Niña currently affecting global weather patterns is not expected to cause major disruption to South American soybean crops, keeping supply relatively stable.
• Indonesia’s biodiesel mandate: Indonesia’s plan to implement the B50 biodiesel mandate in the second half of 2026 could raise crude palm oil demand by 2 million tonnes, but funding constraints and levy adjustments may affect the market.
• China-US trade relations: Uncertainty surrounding soybean agreements between China and the United States, along with possible delays in US biofuel policy, may keep soybean oil prices low and affect crude palm oil price competitiveness.
• Stock levels: Crude palm oil prices fell by almost 20% from their January 2025 peak of RM4,920 per tonne to around RM3,900–RM4,000 in late 2025, driven by higher Malaysian stocks and a narrowing price spread against soybean oil.

However, prices stabilized as the price gap widened again, supporting imports by major buyers and lifting stock levels in China, India, Pakistan, and Bangladesh to comfortable levels above historical averages.

RHB Research expects crude palm oil prices to average RM4,250 per tonne in 2026 and RM4,100 per tonne in 2027.

The bank also expects the palm oil stock-to-use ratio to rise to 17.7% in 2026, pointing to a more stable market.

The research house warned that any deviation from its core assumptions — including geopolitical events, crude oil trends, extreme weather, or changes in biofuel policies — could disrupt this balance.

Source: Business Today