Palm oil prices could reach $1,500 per tonne in the second half of 2026

Global crude palm oil (CPO) prices could rise to $1,500 per tonne in the second half of 2026, according to industry analysts. The expected increase is being driven by elevated crude oil prices, Indonesia’s planned implementation of the B50 biodiesel mandate, and the risk of El Niño affecting production in key producing countries.

According to Tungkot Sipayung, Executive Director of the Palm Oil Strategic Policy Institute (Paspi), palm oil prices remain closely linked to developments in global energy markets. Geopolitical tensions in the Middle East continue to support oil prices, while damaged energy infrastructure may take considerable time to recover even after conflicts subside.

Another factor supporting the market is Indonesia’s planned introduction of mandatory B50 biodiesel blending from July 1. The policy is expected to boost domestic consumption of palm oil feedstock and potentially reduce export availability from the world’s largest palm oil producer.

Analysts are also monitoring the possible emergence of El Niño weather conditions later this year. Such conditions typically reduce crop yields and palm oil production in major producing countries, further tightening global supplies and supporting higher prices.

The World Bank forecasts average crude palm oil prices at $1,089 per tonne in 2026, up from $1,007 in 2025. Average prices reached $1,051 per tonne in the first quarter of this year and increased to $1,148 per tonne in April. Meanwhile, average CIF Rotterdam prices stood at $1,356 per tonne in January–March, compared with $1,230 during the same period last year.

Despite the bullish outlook, Indonesia’s Ministry of Trade lowered the June reference price used to calculate export duties to $1,029.51 per tonne, citing weaker demand from major importers, particularly India. At the same time, the government is moving forward with plans to centralize exports of strategic commodities, including palm oil, through a single-gate export system that is expected to be fully implemented from January 1, 2027.

Tags: Indonesia, prices, palm oil