Malaysian palm oil prices expected to remain supported through April 2027

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Palm oil prices hold through 2027

Highlights

Malaysian palm oil prices are expected to trade in the RM4,500 to RM5,000 per metric ton range through April 2027 as production shifts into a low-yield phase.
Global palm oil production is forecast to fall by 2.7 million tons in 2027, with drought-related low yields caused by El Niño supporting prices in the second and third quarters of 2025.
Benchmark palm oil futures traded at RM4,447 on Friday, down from their late-August peak of RM5,018, despite being up around 9% year to date.

This article was translated from the original. Read the original version by our correspondent here.

Price outlook and production cycle

As reported by The Edge Malaysia, Dorab Mistry said Malaysian palm oil prices are expected to trade in the RM4,500 to RM5,000 per metric ton range through April 2027 as the production cycle enters a low-yield phase following drought conditions linked to El Niño this year.

Mistry, director of Indian consumer goods company Godrej International, said palm oil production is currently still in its high-yield phase despite El Niño, and this could continue through January.

He said the production cycle is expected to shift directly into a low-yield phase in February and remain there until November due to the effects of drought. This shift is expected to support prices in the second and third quarters of next year, while total palm oil production is forecast to fall by 2.7 million tons in 2027.

Current stock pressure and implications for regional markets

Benchmark palm oil futures traded at RM4,447 at midday on Friday. Prices have fallen sharply since late October as rising stockpiles in Malaysia weighed on market sentiment.

The market had previously expected El Niño-related drought to disrupt production sooner, but Mistry said traders became overly confident too early about the extent of its impact, and the previous rise in Malaysian palm oil prices came too soon. The palm oil benchmark rose as much as 24% this year, reaching a peak of RM5,018 per metric ton in late August, before gradually declining; it is still up around 9% year to date.

He said this low-yield cycle is likely to have a greater impact on Indonesia because of more severe drought, although oil palm trees in the country are younger and may not be as badly affected as expected. Meanwhile, total vegetable oil production for the 2026/2027 season is expected to increase by four million tons, compared with demand growth of six million tons.

Previously, we highlighted the S&P 500 decline as technology earnings and Treasury yields shaped market sentiment.

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