Palm oil supply shortage to persist until 2026

According to a forecast by Malaysian research firm Kenanga Research, the palm oil market is expected to remain stable in the near future without any significant growth drivers. Analysts maintain a neutral outlook for Malaysia’s plantation sector and expect the supply shortage in the global edible oil market, which began in 2025, to continue into 2026, according to Malaysian news portal The Star.

Prices are expected to remain stable amid limited supply, despite the projected decline. The CPO price forecast is 4,300 ringgit/tonne in 2025 and 4,000 ringgit/tonne in 2026. Supply growth in 2026 is estimated to only match the trend demand growth (3-4%), preventing inventory buildup.

According to Kenanga Research, only 67% of palm oil plantation companies met or exceeded expectations in the third quarter of this year, compared to 89% in the second quarter of 2025. However, in the third quarter, 89% of planters met or exceeded the consensus forecast, compared to 78% in the second quarter of 2025.

OleoScope analysts previously noted that the mass production of palm oil in the tropics is a serious concern, primarily among environmental and human rights groups, as it significantly contributes to tropical deforestation in the countries where the crop is grown and is considered a factor in social problems due to allegations of human rights violations among producers.

As a reminder, the area under palm oil plantations has increased by 11% over the past 20 years and will reach 27.9 million hectares by the end of this year.

Tags: Malaysia, palm oil, supply and demand balance, crop forecast