18/02/2026 (Oils and Fats International Magazine) - Production levels in Malaysia and Indonesia - as well as demand from markets like India and China - will determine palm oil prices this season, with forecasts in the MYR3,800-4,800 (US$974-1,230)/tonne range heard at last week’s Palm & Lauric Oils Price Outlook Conference & Exhibition (POC2025).

Speakers at the 9-11 February event in Malaysia highlighted the need to increase yields in leading producing countries Indonesia and Malaysia.

“Palm is losing its momentum … supply is stagnating,” Carl Bek-Nielsen, vice chairman and chief executive director of United Plantations, said.

“The last 15-20 years of NGO pressure to curb deforestation, combined with a failure to replant ageing oil palms, will shrink future supplies of palm.”

If Malaysia could increase its yields from the current 3.5M tonnes/ha to 4.5M ha by 2035, it could increase production from 20.3M tonnes/year to 26M tonnes/year by 2028, he added.

Thomas Mielke, executive director of ISTA Mielke (Oil World), said the challenge for the years ahead was to produce sufficient supplies, in good quality and at reasonable prices in a sustainable way

“The focus must be to raise yields per hectare, owing to the limitations of

land. But area expansion is also needed,” he said.

Despite a general decline in palm oil production, 2025 was a record year for Malaysian palm oil production with output reaching 20.28M tonnes due to an increased workforce and good weather conditions, the 2,000 delegates at POC heard.

However, Malaysian production was expected to decrease in 2026, due to ageing palms and labour constraints.

Mielke estimated Malaysian output would total 19.87M tonnes this year, while Julian McGill, managing director of Glenauk Economics, estimated production of approximately 19.7M tonnes.

Dr Mohamad Fadhil Hasan, head of the foreign affairs division at the Indonesian Palm Oil Association (GAPKI), forecast Indonesia’s crude palm oil (CPO) output to increase by 2%-3% in 2026, compared to a growth rate of 8% the previous year.

Mielke projected Indonesia’s 2026 palm oil output falling from 49.60M tonnes in 2025 to 48.80M tonnes this year.

Against this backdrop, the effect of the Indonesian state’s seizure of ‘illegally’ used land - including oil palm plantations - on overall palm oil production was still unknown.

McGill said the final oil palm planted area seized by state-owned operator Agrinas was expected to be around 1.2M ha with the impact starting to be felt in the second half of this year. However, with good weather, a 0.6M tonnes increase in Indonesian output was still expected.

The Indonesian government’s decision to shelve the introduction of its 50% palm oil biodiesel blending target (B50) this year would also increase available palm oil supplies, delegates heard.

Other factors - including reduced imports from China and India and competition from rival oils, particularly soyabean oil - would also impact the palm oil sector while the final announcement of the US biodiesel policy for 2026 and 2027 – expected in March – would also influence price directions, the conference heard.

Although palm oil is still the dominant oil globally, its market share was falling, according to Mielke.

“CPO has lost its growth dynamics,” he said.

Mielke projected Malaysian refined, bleached and deodorised (RBD) palm olein prices at US$1,000-US$1,200 (MYR3,899-4,680)/tonne in the first half of 2026, increasing to US$1,100-US$1,350 (MYR4,290-5,265)/tonne in the second half.

GAPKI’s Hasan sees CPO prices trading at MYR4,100-4,400 (US$1,051-1,128)/tonne in the first half, easing slightly to MYR4,000-4,300 (US$1,025-1,102)/tonne in the second half.

Dorab Mistry, director of Godrej International, said he expected palm oil futures to trade between MYR3,800-4,300 (US$974-1,102)/tonne until July, barring weather disruptions.

McGill said he expected palm oil prices to trade in the MYR4,000-MYR4,300 (US$1,025-1,102)/tonne range in the first half of 2026, potentially reaching MYR4,500 (US$1,153)/tonne in the second half, while Bek-Nielsen forecast CPO at MYR3,900-4,300 (US$999-1,1202)/tonne, subject to good weather.

GAPKI’s Hasan said any price projections could be affected by domestic mandatory biodiesel policies, particularly in Indonesia, limited supply elasticity and global demand dynamics.

“In addition, geopolitics, trade and sustainability shocks will be factors that can change palm oil prices,” he said.

Other factors, including EU deforestation rules tightening faster than expected, trade retaliation or sudden changes in export taxes/quotas, could also impact the sector, he added.

https://www.ofimagazine.com/news/mixed-forecasts-for-palm-oil-at-poc2026