Defying Consensus: Expert predicts CPO to breach RM5,200 by mid July 2026
Palm oil prices are expected to keep climbing as rising crude oil prices and stronger biodiesel mandates boost demand, with analysts forecasting further gains despite signs of weaker consumption in key markets.
According to a report by Reuters, palm oil prices are expected to continue rising in the coming months, mainly due to stronger demand for biodiesel as global energy markets tighten. Analyst Dorab Mistry predicts prices could increase by about 12 percent to reach around 5,200 ringgit per metric ton by mid July 2026.
Although prices slipped slightly during midweek trading, they have already climbed roughly 15 percent since late February, when geopolitical tensions, especially involving the United States, Israel, and Iran, drove energy prices higher.
Malaysian palm oil prices are likely to rise about 12% to 5,200 ringgit ($1,316) a metric ton by mid-July, as higher energy prices from the U.S.-Israeli war on Iran boost biodiesel demand and tighten supplies, analyst Dorab Mistry said on Wednesday.
“Rising energy prices prompted Indonesia to reinstate its B50 palm biodiesel programme from 1 July 2026,” Mistry said who is the director of Indian consumer goods company Godrej International. “Biodiesel mandates are being increased in other countries like Malaysia, Thailand and others too.”
The increase in crude oil prices has made biofuels more appealing, narrowing the price gap between regular diesel and palm-based biodiesel. In some cases, palm biodiesel is now competitive with, or even cheaper than, fossil fuels, reducing the need for government subsidies.
At the same time, major producers are expanding biodiesel usage. Indonesia plans to raise its mandatory palm-based biodiesel blend from 40 percent to 50 percent starting July 1, while Malaysia and Thailand are also increasing their blending requirements.
This growing shift toward biofuels is also pushing up the prices of other vegetable oils, such as soybean oil, especially after the United States introduced a new biodiesel program for 2026 to 2027.
However, higher prices are starting to slow demand in key markets. In India, consumption has weakened due to rising costs, although imports are expected to recover in the coming months as stock levels fall.
Overall, a mix of high energy prices, stronger biodiesel mandates, and tighter supply is likely to keep palm oil prices on an upward trend in the near future.
The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange fell 1.34% to 4,647 ringgit at the midday break on Wednesday, though it is up about 15% since the war began in late February.
Oil Palm World will continue to follow this important development.