The BMD crude palm oil price has increased to USD 1,096/mt from USD 975/mt at the beginning of the year, supported by higher Brent crude prices, strong soybean oil values, and expectations of tighter supply. However, the anticipated supply tightening has not yet materialised. As of the end of February, Malaysia held record palm oil stocks of around 2.7 mmt, reflecting strong production in Q4 and slower exports in Q4 and Q1. As a result, Brent crude and competing vegetable oil prices remain the key factors underpinning palm oil values.
Price volatility in March may be driven by fluctuations in Brent crude, influenced by political statements, uncertainty over oil supply, and speculation about the duration and potential impact of the Middle East conflict on the Strait of Hormuz.
In Q2, seasonal production recovery would normally exert downward pressure. However, Glenauk Economics has indicated that output growth could remain limited, potentially keeping supply relatively tight. Discussions around a possible earlier implementation of Indonesia’s B50 biodiesel mandate could add volatility and provide a price floor. Overall, prices could move sideways to slightly lower during Q2.
In Q3, seasonal demand factors may support a price recovery, as imports typically strengthen during this period. In Q4, some market participants suggest the impact of land seizures in Indonesia could begin to weigh on production, while renewed speculation about a higher biodiesel mandate in 2027 could provide additional support. Overall, upside price risks appear skewed toward the second half of the year.
Read the full palm oil market analysis in Vesper’s Free Oils & Fats H1 2026 Market Outlook: https://vespertool.com/downloads/
