Kuala lumpur: The crude palm oil (CPO) market is projected to begin 2026 with a weaker outlook, following the elevated prices seen in 2025. Malaysian Rating Corporation Bhd (MARC Ratings) forecasts CPO prices to range between RM3,850 per tonne and RM4,250 per tonne in 2026, down from RM4,300 per tonne this year.

According to BERNAMA News Agency, the softer trajectory is attributed to more favorable weather patterns, recovering yields, and a gradual normalization in global production, marking a shift from the tight supply conditions observed in early 2025. An unexpectedly large supply surge in Indonesia kept 2025 prices below MARC Ratings’ initial expectations despite being higher than in 2024. The overall supply gains resulted in a lower CPO price peak in 2025 compared to 2024, with prices peaking at RM4,875 in 2025, below the 2024 high of RM5,343.

Recent years have seen rising palm oil production supported by yield recovery due to improved weather conditions following the 2023-2024 El Nino event. As of September 2025, Indonesia’s output rose significantly by 11.3 percent year-to-date, while Malaysia posted a modest 1.8 percent increase by October 2025.

Looking ahead to 2026, demand dynamics remain broadly supportive despite some variations between markets. The United States Department of Agriculture forecasts global palm oil consumption will grow, albeit remaining slightly below total production. India, the largest CPO importer, is expected to maintain strong purchases, supported by palm oil’s price competitiveness relative to soybean and sunflower oils.

Additionally, the Food and Agriculture Organisation of the United Nations projects a 2.1 percent increase in the utilization of global oils and fats in 2026, led predominantly by the biofuel sector.