Global palm oil output to fall by at least 2 mln tons in 2027

Global palm oil production could decline by at least 2 mln tons in 2027, according to Oil World Executive Director Thomas Mielke. He said the actual drop could be even larger due to the impact of El Niño and other climate anomalies.

El Niño typically brings hotter and drier weather to Indonesia and Malaysia, the world’s two largest palm oil producers. So far, weather conditions have not fully affected palm yields because of the lagged impact, but the strongest effects are expected in 2027 and 2028.

In Malaysia, the world’s second-largest producer, palm oil output could fall to 19.2–19.3 mln tons in 2027. Mielke described the current estimate of a 2 mln ton decline in global production as conservative.

A potential slowdown in palm oil exports from Indonesia could add further pressure to the global balance. According to Oil World, importing countries may find it difficult to offset lower Indonesian shipments with supplies from other origins.

The expected production decline could tighten the global palm oil balance after a period of high inventories, particularly in Malaysia. If the impact of El Niño proves stronger than currently expected, lower supply in 2027–2028 could provide additional support to global prices.

Tags: palm oil, global market