Weather Risks, Biodiesel Expansion To Tighten Global Palm Oil Supply: SEA
22/04/2026 (BW Businessworld) - The association says that with India’s close partners ramping up their biodiesel mandates and diverting more palm oil toward domestic energy use, it is bound to result in compressing exportable supplies from the region
Emphasising that the recent dip in palm oil imports reflects short-term demand adjustment due to high landed prices, the Solvent Extractors’ Association of India (SEA) has stated that the interplay of geopolitics, weather risks and biodiesel expansion is making the case for a tighter global palm oil balance going into the current financial year.
The association, in a post on X, said that with India’s close partners ramping up their biodiesel mandates and diverting more palm oil toward domestic energy use, it is bound to result in compressing exportable supplies from the region.
“Overall, the interplay of biodiesel expansion, weather risks, and geopolitics is setting the stage for a more constrained global palm oil balance going into 2026-27,” BV Mehta, Executive Director, SEA, said in the post.
The association added geopolitical disruptions around the Strait of Hormuz and evolving trade policies are adding layers of uncertainty to global supply chains. “With Indonesia’s shift toward B50, Malaysia’s to B15 and Thailand’s to B20, it is quite evident how global palm oil trade is getting tighter in near future!,” the statement noted.
With the India Meteorological Department flagging a below-normal monsoon and the likelihood of El Nino conditions, the risk of higher import demand in the second half of the year remains significant if domestic oilseed output is impacted, SEA pointed out.
In a separate post, the association noted that given the monsoon’s critical role in driving kharif output and rural demand, any shortfall could translate into tighter supplies and food inflation. This risk is further compounded by rising input and fuel costs amid ongoing United States and Iran tensions.”
The possible emergence of El Niño remains a key concern, potentially dampening monsoon intensity, the association added.