Market Overview
Crude Palm Oil (CPO) prices have experienced significant volatility in Q1 2026, driven by weather disruptions in Indonesia and Malaysia — the world's two largest producers. Combined, these two countries account for over 85% of global palm oil supply.
Key Demand Drivers
- India: Remains the largest importer of palm oil globally, with import volumes up 8% year-on-year.
- Biofuel mandates: Indonesia's B35 biodiesel mandate continues to absorb significant domestic production.
- Food sector recovery: Post-pandemic food processing demand remains robust across Southeast Asia.
Supply Constraints
La Niña weather patterns have caused above-average rainfall in key producing regions, disrupting harvesting schedules and reducing fresh fruit bunch (FFB) yields by an estimated 5-7%.
Price Outlook
Benchmark CPO futures on the Bursa Malaysia Derivatives Exchange are expected to trade in the range of USD 870-950/MT through Q2 2026, with upside risk if weather disruptions persist.