Oil World Executive Director Thomas Mielke said Friday at a conference in Bali that Indonesia's palm oil production may fall by 3 million tonnes next year, while Malaysia's output could decline by about 300,000 tonnes. According to Sina Finance, Mielke said drought could cause larger production cuts in Indonesia in the second half of 2027 and in 2028, and Malaysia's high palm oil inventories may fall over the next two to five months.
Malaysia's refined palm olein prices may rise to $1,300 per tonne in January-June, while Rotterdam palm kernel oil prices are forecast to exceed $2,200 per tonne in 2027. Palm oil prices have edged up and are expected to continue recovering from January through March and afterward.
Global palm oil exports are forecast to fall by 2.5 million to 3.5 million tonnes in the 2026-27 season. With palm oil supply growth insufficient, global reliance on soybeans, rapeseed and sunflower seeds is increasing. Soybean crushing is expected to rise by 8 million to 9 million tonnes in 2026-27, while inventories decline.
Biodiesel production may increase by 6.4 million tonnes this year to 69.2 million tonnes, but its growth could narrow in 2027. Variables to watch include rainfall over the coming months and whether countries reduce mandatory biodiesel blending requirements because of inflation concerns.