Crude palm oil enters H2 2026 at approximately 4,100 Malaysian ringgit/tonne, up 8% year-over-year, as Indonesia's B40 biodiesel mandate creates structural demand growth. Indonesian palm oil production is forecast at 52 Mt, up 5% from 2025.
The B40 mandate (40% fatty acid methyl ester blend) consumes approximately 16 million kiloliters of palm oil-derived biodiesel annually, representing 30% of Indonesian production. The government is targeting B50 by 2030.
Malaysian production is forecast at 19 Mt, up 3%, with labor availability improving post-pandemic. however, aging palm trees (25% over 25 years) limit yield potential.
The CPO-crude soybean oil spread has narrowed to $100-150/t, making palm oil more competitive in food and oleochemical applications. Indian and Chinese imports remain the key demand swing factors.
Price projections for H2 2026 cluster at 3,800-4,400 MYR/t.
Palm oil buyers should secure H2 requirements at 3,900-4,200 MYR/t through fixed contracts. Indonesian biodiesel demand provides structural support. For oleochemical producers, consider feedstock flexibility between palm and alternative oils. Budget 4,000-4,600 MYR/t for 2027.