The palm oil market will remain tight in 2026 despite the resumption of production.
Fastmarkets forecasts a balanced global palm oil market in 2026 as rising food and biofuel demand meets constrained supply. Indonesia’s output may rebound but faces land policy risks, while Malaysia’s production is set to decline. Biofuel mandates support prices, with India driving imports and prices largely stable next year ahead.
According to Fastmarkets’ forecast, in 2026, the global palm oil market will reach a balance between growing demand and structural supply constraints. Increased demand from the food and biofuel industries is being met with limited production expansion, creating a stable pricing environment and maintaining market volatility.
Indonesia remains a key supply driver, with crude palm oil production expected to rebound by 1.5–2 million tonnes in 2026 compared to 2024. However, Fastmarkets warns of significant risks associated with the government’s land acquisition program: approximately 1.5 million hectares of plantations are already under state control, with another 1.8 million hectares under review, which could threaten 2–5 million tonnes of potential production in 2026.
In Malaysia, the situation is the opposite: after a strong 2025, production in 2026, according to Fastmarkets, will decline to 19.6 million tonnes, 400,000 tonnes less than the previous year. Stagnant acreage, aging crops, and high dependence on foreign labor limit the country’s ability to increase supply in the medium term.
Biofuel policy will remain a key price support factor. Indonesia’s B45 mandate will be in effect in 2026, while the market expects the B50 to be implemented only at the end of the year. This means that a significant portion of palm oil will continue to be diverted to domestic consumption, limiting exports and creating a price floor on the global market.
In terms of demand, Fastmarkets notes India’s key role as the main import driver in 2026, while China’s demand will remain subdued due to significant soybean oil inventories. In the EU, regulatory requirements will be an additional factor, particularly the postponement of the EUDR implementation until December 2026. Overall, Fastmarkets forecasts stable prices in the first half of 2026, with a tendency to stabilize in the second half, barring weather shocks or drastic policy changes.
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Source : Ukr Agro Consult
