The palm oil market is expected to remain on a positive footing, with crude palm oil (CPO) prices likely to stay firm through 2027, supported by Indonesia’s 50% palm-oil-based biodiesel (B50) mandate, strong energy prices and sustained demand from India, according to TA Research data reported by The Star.
In its latest review of the plantation sector, TA Research said stronger demand for biodiesel and potential weather-related disruptions to supply could provide continued support to CPO prices. However, an improvement in production in the near term could limit the upside, Oil & Fats International reported.
The research house said seasonal increases in palm oil production and competitive soybean oil prices could weigh on the market in the short term.
Fresh fruit bunch (FFB) production is expected to recover during the second half of 2026, although the extent of the improvement is likely to differ across plantation companies.
Looking further ahead, TA Research identified El Niño as an important supply risk for 2027, particularly in Indonesia. The impact of dry weather on palm yields is typically delayed, meaning the effects of an El Niño event could emerge later.
Higher fertiliser prices could add to production costs, while downstream profitability is expected to remain mixed. Excess refining capacity and strong competition from Indonesian producers could continue to put pressure on margins.
The research house also pointed to uncertainty surrounding Indonesia’s new commodity exchange and export monitoring framework. Until details of the final regulations become clearer, the changes could create volatility in palm oil trade flows.
On the sector’s second-quarter 2026 performance, TA Research said plantation companies broadly delivered results in line with expectations.
Overall sector earnings improved despite generally lower CPO prices compared with the previous year. Higher production volumes, improved downstream contributions and operational gains at some companies helped offset the impact of softer prices.
However, the performance of smaller plantation companies remained mixed.
