Advertise
JAKARTA — Palm oil is poised to regain a price premium over soyoil in 2027, as El Niño-driven production risks collide with surging biodiesel demand in top producer Indonesia, a senior industry official has warned.
Eddy Martono, chairman of the Indonesian Palm Oil Association (GAPKI), said tightening palm oil supplies next year could push the tropical oil's prices above those of rival soyoil, a pattern last observed in 2024. Speaking to Reuters on Tuesday, Martono attributed the outlook to dry weather linked to the El Niño climate phenomenon, which is expected to weigh on output across the major producing regions.
Palm oil, predominantly produced in Indonesia and Malaysia, competes in global vegetable oil markets against soyoil sourced from South America and sunflower oil from the Black Sea region.
Martono projected Indonesia's 2027 palm oil output at 56.6 million metric tonnes, down 3.7% from the previous year, as El Niño-related dry conditions curb yields. At the same time, domestic biodiesel demand is expected to climb 18.5% to a record 17.4 million tonnes, driven by Indonesia's renewable fuel policies.
The combination of rising domestic consumption and lower output is set to slash Indonesia's palm oil exports by 14.9% in 2027 to 26.5 million tonnes — the lowest level since 2016, according to Martono.
The projected supply tightening carries significant implications for global edible oil trade flows and pricing, with importers across Asia, the Middle East, and Africa likely to face higher costs and increased competition for alternative vegetable oils.
Source: The Edge Malaysia