Palm oil outlook
European Parliament's EUDR one-year delay fundamentally alters palm oil procurement dynamics.
The European Parliament approved a one-year EUDR delay extended to December 2026, providing Indonesian and Malaysian suppliers additional time to address smallholder documentation challenges. However, prolonged regulatory uncertainty keeps buyers cautious about long-term commitments. While delay eliminates immediate compliance pressure, market participants question the value of investments already made. Extended uncertainty maintains elevated risk premiums as companies remain hesitant about procurement strategies.
For retail grocers: EUDR regulatory overhang directly impacts cooking oils, spreads, and processed foods using palm oil ingredients. Retailers importing into or sourcing from Europe face supply chain paralysis. Buyers restricting purchases to essential volumes while awaiting clarity creates artificial scarcity perception. Your procurement teams should anticipate price volatility driven by regulatory noise rather than fundamentals. Deploy a Price Index Tracker to monitor palm oil cost movements and benchmark performance.
Deteriorating fundamentals create sustained oversupply: Malaysian production surged 5.49% yet exports collapsed 18.7%.
Malaysian production surged 5.49% in first 25 days of November, yet exports collapsed 18.7% to 1.04 million tons over same period. This supply-demand imbalance pushed Malaysian palm oil stocks to multi-year highs. Malaysian Palm Oil Board cut December's crude palm oil reference price in acknowledgment of mounting inventory pressures weighing on market sentiment.
For retail grocers:
- Oversupply despite production growth signals severe wholesale cost relief potential through H1 2026.
- Stock buildup and reference price cuts indicate your suppliers hold excess inventory seeking buyers. This is a negotiation moment - use oversupply to secure favorable long-term pricing on cooking oils, margarines, and palm-based ingredients.
- Palm oil prices are projected to average $1,037.40/mt in 2026.This supply-demand imbalance has pushed Malaysian palm oil stocks to multi-year highs, prompting the Malaysian Palm Oil Board to cut December's crude palm oil reference price in what sources described as official acknowledgment of mounting inventory pressures weighing heavily on market sentiment.
Global wheat and corn oversupply caps prices through Q1 2026; recovery potential signals margin opportunity for Q2.
Market participants warned multiple policy delays are setting up sustained oversupply conditions through H1 2026. Indonesian B50 biodiesel mandate implementation could be pushed from early 2026 to H2 2026. This delay means roughly 3 million metric tons of Indonesian palm oil originally earmarked for domestic biodiesel consumption will instead flood export markets, creating structural surplus burdening international prices into mid-2026.
For retail grocers: Delayed biofuel mandate = 3 million mt diverted to global markets. This is massive downward price pressure through mid-2026. Cooking oil, spreads, and processed food costs should decline materially. Lock in procurement contracts now; even as inventory normalizes, policy delays sustain surplus through June. Expect wholesale relief through Q2 2026.
Extended EUDR timeline perpetuates procurement uncertainty; paralyzed European buying combined with Malaysian production momentum suggests inventory overhangs persist through Q1 2026.
Extended EUDR timeline expected to perpetuate procurement uncertainty among European buyers. Companies restricting purchases to essential volumes while awaiting legislative clarity. Paralyzed buying behavior combined with continued Malaysian production momentum as seasonal recovery exceeds expectations suggests inventory overhangs will persist through Q1 2026. With Indonesian exports remaining elevated due to delayed domestic demand absorption and Malaysian stocks at multi-year highs, fundamental backdrop points to sustained pressure on global palm oil markets through H1 2026.
For retail grocers: Buyers' paralysis = extended glut through H1 2026. Malaysian and Indonesian inventory overhangs will suppress global prices despite European demand normalization. Your cooking oil, spread, and processed food costs remain under downward pressure. Aggressively price Q1 to capture margin; maintain pricing Q2 as relief persists. Palm oil combines oversupply with policy delays - creating an extended cost-relief window, unlike meat (premium/tight) or grains (recovering).
These converging supply pressures have driven Malaysian palm oil futures through key technical support levels, with market participants reporting that the RM4,088 support level that held for 15 days was decisively broken, sending prices to test new lows around RM4,040 per ton - near five-month lows.
Traders noted that brief bargain hunting emerged at these levels, though industry insiders emphasized that gains remained capped by a stronger ringgit and persistently weak export expectations.
Additional headwinds are emerging from currency dynamics, with sources highlighting that Indian rupee depreciation against the USD is making palm oil less attractive to the key buyer market.
Market participants cautioned that while talk circulates about potential 20%+ growth in Indian palm oil imports this month, this represents growth from an already depressed base, with current Indian demand remaining sluggish due to rupee weakness and adequate domestic stocks.
Sources said that with selling pressure currently outweighing destination demand and fundamental oversupply conditions expected to persist through H1 2026, the technical weakness reflects deeper structural imbalances that are likely to keep palm oil prices under sustained pressure in the coming months.
Palm oil forecast
Commentary by Jamie Pakenham-Walsh
Palm Oil prices have fallen steeply over the last number of months due to a number of fundamental factors.
There is little evidence to suggest the need for a significant price rally, but some kind of price stabilization into 2026 is possible.
Seasonally, prices often peak in Q1, which argues for some kind of rally. This rally is likely to be only a temporary move, unless there is a significant fundamental shift.
Expana creates specific, quarterly price targets two years out, along with fundamental graphs and technical models that substantiate the views.
Please contact Expana to get a view of how this works.
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