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Palm oil prices are projected to remain well-supported through 2027, underpinned by Indonesia's biodiesel mandate requiring 50% palm-oil content (B50), firm energy markets, and sustained import demand from India, according to data from TA Research cited by The Star.
The research house noted that stronger biodiesel demand, combined with potential weather-related supply disruptions, should continue to provide a floor under crude palm oil (CPO) prices. At the same time, a near-term rebound in output and competitive soybean oil prices could cap further upside.
Fresh fruit bunch (FFB) production is expected to recover during the second half of 2026, although the magnitude of the recovery is likely to vary across plantation operators. Looking further ahead, TA Research flagged El Niño as a key supply-side risk for 2027, particularly in Indonesia, pointing out that the impact of dry weather on palm yields typically materializes with a delay.
On the cost side, higher fertilizer prices could pressure producer margins, while downstream profitability is expected to remain mixed. Excess refining capacity and stiff competition from Indonesian players are likely to continue weighing on processor margins.
TA Research also highlighted uncertainty surrounding Indonesia's new commodity exchange and export monitoring framework, warning that until final regulations become clearer, the changes could inject volatility into palm oil trade flows.
On second-quarter 2026 results, the research house said plantation companies generally delivered in line with expectations. Aggregate sector earnings improved despite CPO prices trending lower year-on-year, as higher production volumes, stronger downstream contributions, and operational gains at select companies offset the impact of softer prices. However, performance among smaller planters remained uneven.
Source: Bioenergy Times