2026 Palm Oil Outlook
Commentary by Kyle Holland
The European Parliament's approval of a one-year EUDR delay has fundamentally altered palm oil procurement dynamics, with market players telling Expana that while the confirmed extension to December 2026 provides Indonesian and Malaysian suppliers additional time to address smallholder documentation challenges, the prolonged regulatory uncertainty is keeping buyers cautious about long-term commitments.
Industry insiders emphasized that the delay has eliminated immediate compliance pressure but noted that market participants are now questioning the value of investments already made in anticipation of the original timeline, with traders saying that the extended uncertainty is maintaining elevated risk premiums as companies remain hesitant about procurement strategies.
However, this regulatory overhang coincides with deteriorating fundamentals that sources say are creating sustained oversupply pressures. Malaysian production surged 5.49% in the first 25 days of November according to SPPOMA data, yet market participants reported exports collapsed 18.7% to 1.04 million tons over the same period.
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.
Market participants warned that multiple policy delays are setting up sustained oversupply conditions through H1 2026, with Indonesian sources indicating the B50 biodiesel mandate implementation could be pushed from early 2026 to H2 2026.
Traders emphasized that this delay means roughly 3 million mt of Indonesian palm oil originally earmarked for domestic biodiesel consumption will instead flood export markets, creating what industry insiders described as a structural surplus that could burden international prices well into mid-2026.
The extended EUDR timeline is expected to perpetuate procurement uncertainty among European buyers, with sources saying that companies are restricting purchases to essential volumes while awaiting legislative clarity.
Industry insiders cautioned that this paralyzed buying behavior, combined with continued Malaysian production momentum as seasonal recovery exceeds expectations, suggests inventory overhangs will persist through Q1 2026.
Market players noted that with Indonesian exports remaining elevated due to delayed domestic demand absorption and Malaysian stocks already at multi-year highs, the fundamental backdrop points to sustained pressure on global palm oil markets through the first half of next year.
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 byJamie 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.
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