Global crude palm oil (CPO) prices are expected to move higher later this year as expanding biofuel mandates and supply-side challenges tighten availability across major producing countries, according to stakeholders in the oil palm sector.
Speaking on developments in the industry, President of the National Palm Produce Association of Nigeria, Alphonsus Inyang, said market conditions are increasingly pointing towards stronger prices driven by changes in production and consumption patterns, The Nation reported.
According to Inyang, one of the key factors influencing the market is Indonesia’s decision to implement its B-50 biodiesel mandate from July 1, 2026.
He said the policy is expected to reduce export availability as more crude palm oil is diverted for domestic energy use.
“In fact, later this year, we expect to see prices rise. Prices are going to move upward because of developments taking place in the sector,” Inyang said.
Explaining the impact of the policy, he noted that Indonesia, the world’s largest producer of palm oil, is expected to consume an additional three million tonnes of crude palm oil under the expanded biodiesel programme.
According to him, volumes that would normally enter international trade will instead be absorbed by domestic demand.
“Indonesia will commence implementation of the B-50 biodiesel mandate, which means an additional three million tonnes of crude palm oil will be consumed locally,” he said.
Inyang added that Malaysia is also strengthening its own biofuel programmes, which could place further pressure on global supply.
“Malaysia too is not sleeping. They are also working on their own biofuel mandates,” he said.
Apart from policy-driven demand, Inyang pointed to structural challenges within the industry, particularly the rising cost of replanting ageing oil palm trees.
He said the financial burden of plantation renewal is making it increasingly difficult for smallholder farmers to replace old plantations.
“The high cost of replanting means more smallholders are finding it very difficult because it requires significant investment,” he said.
According to Inyang, ageing plantations across Nigeria, other African countries and Malaysia are already affecting productivity levels and could further tighten supply in the coming years.
He said the combination of stronger domestic biofuel demand and slower plantation renewal is likely to support higher palm oil prices globally.
“We expect to see prices go up because of supply shortages resulting from these factors,” Inyang added.
