Palm oil market to remain tight in 2026 despite supply recovery

expects crude palm oil (CPO) production in Indonesia to recover by 1.5–2.0 million tonnes in 2026 compared with 2024 levels. However, significant risks are emerging from the government-backed land seizure program. Around 1.5 million hectares of oil palm plantations have already been transferred to state control, with a further 1.8 million hectares under verification, potentially putting 2–5 million tonnes of CPO output at risk in 2026. In contrast, Malaysia is facing a more challenging outlook. After a strong production year in 2025, Fastmarkets projects Malaysian CPO output to decline to 19.6 million tonnes in 2026, down 400,000 tonnes year on year. Stagnant planted area, aging oil palm trees and heavy reliance on foreign labour continue to cap the country’s production potential in the near term. Biofuel policy will remain a key anchor for prices. Indonesia plans to implement a B45 biodiesel mandate in 2026, while the more ambitious B50 blend is now expected only toward the end ...