B50 and El Niño could lift crude palm oil prices in 2027
HLIB raised its 2027 average crude palm oil price forecast to MYR 4,500/tonne, citing Indonesia’s B50 biodiesel programme and El Niño-related supply risks. Higher domestic consumption, potentially weaker yields and plantation enforcement could tighten supplies, despite elevated Malaysian stocks reaching 2.82 million tonnes in August.
Crude palm oil (CPO) prices could remain elevated in 2027 due to rising domestic demand in Indonesia and weather risks linked to El Niño. HLIB raised its average CPO price forecast for 2027 to MYR 4,500/t from MYR 4,300/t previously.
One of the key supportive factors will be the expansion of Indonesia’s B50 biodiesel program. Its full implementation from July 1, 2026 could increase domestic CPO consumption by around 3 mln tons per year compared with B40. This is equivalent to about 6% of Indonesia’s palm oil production in 2025.
El Niño is creating an additional risk to supply. A high probability of a strong event in October–December 2026 increases the risk of drier conditions in Kalimantan. The negative impact of rainfall deficits on oil palm yields usually appears with a lag, meaning the main effect could emerge in 2027.
CPO supply could also be affected by tighter enforcement against plantations operating on land in violation of forestry regulations. A reduction in productive acreage could further constrain Indonesian output and tighten the global palm oil market.
Meanwhile, palm oil stocks in Malaysia remain high for now, rising 7.5% m/m in August to 2.82 mln tons. Inventories may stay elevated over the next one to two months, but strong CPO demand for biodiesel and risks of weaker yields could provide renewed support to prices later on.
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Source : Ukr Agro Consult
