SOMEONE recently asked me for my palm oil price outlook. I nearly reached for my calculator, then remembered that calculators, analysts and crystal balls have one thing in common – they all work best before the real world interrupts.
Price forecasting is a brave occupation. Sometimes it resembles economics. Sometimes, astrology with spreadsheets.
In commodities, it is often a well-dressed guess walking carefully across a slippery estate road.
Back on Feb 9 to 11, 2026, at the Palm and Lauric Oils Price Outlook Conference and Exhibition, better known as POC 2026, the mood was broadly sensible, disciplined and reassuringly wrapped in caveats.
The “five Ms” – Mielke, McGill, Mistry, Mohd Fadhil Hasan and M.R. Chandran – did not speak with one voice, but the market pulse hovered largely around the RM4,000 band.
In my own reflection then, I called the outlook “supported, but not spectacular”.
Palm oil looked firm, but not feverish. Elevated, but not euphoric.
One could remain cautiously optimistic without standing on a chair and shouting “boom” across the ballroom.
But markets, like politics, have a wicked sense of timing. No one at POC 2026 quite foresaw how quickly Middle East tensions from late February would redraw the chart, change energy sentiment and alter biodiesel arithmetic.
A single disruption can indeed disrupt the noble art of price forecasting – sometimes faster than a tailor can alter a hemline. That is why all commodity forecasts should perhaps carry a standard plantation-market warning: “barring unforeseen Trump-like circumstances, geopolitical tantrums, weather mischief, policy U-turns and other acts of market theatre.”
Almost on cue, the market then received a fresh fashion note from one of the best-known voices in edible oils, Dorab Mistry.
He expects palm oil prices could rise to about RM5,000 per tonne by June and potentially RM5,200 by mid-July, driven by higher energy prices, biodiesel demand and tighter supplies.
The report noted that benchmark palm oil futures, at RM4,647 per tonne, were already up about 15% since the late-February escalation.
When Mistry speaks, the edible oils world normally listens. Some may even adjust their spreadsheets before finishing their coffee.
His forecasts are closely watched because his supply and price views often influence market sentiment. But even famous forecasts must still walk through the muddy estate road of reality.
In commodity markets, especially when the world is in turmoil, prophets can look brilliant one month and like they wore a tuxedo to a mud fight the next.
The hemline of prices
That latest forecast triggered another memory – the old Hemline Index Theory.
Popularised by economist George Taylor in 1926, it suggests that shorter skirts tend to appear during periods of prosperity and confidence, while longer skirts – as seen in the more cautious moods of the 1930s and 1970s – may signal recessionary or bearish times.
It is not exactly central-bank-grade forecasting, of course. No finance minister should set policy by measuring a midi skirt.
But as a metaphor, it is wonderfully useful. Markets, like fashion, are shaped by confidence, fear, mood swings and the occasional dramatic change of style.
In palm oil, the “market hemline” may rise when supply tightens, biodiesel demand strengthens and geopolitical tension pushes energy prices higher.
But as always, markets can change style quickly. So this reflection is not an attempt to declare where crude palm oil prices must go, as though the market were waiting politely for my permission.
It is instead an attempt to explain, in plain language, why palm oil prices are being structurally supported – and why that support still comes with volatility, substitution risk, demand rationing, policy uncertainty and the occasional banana skin on the trading floor.
Mistry’s latest forecast captures the current mood. Biodiesel demand is tightening the balance. Energy prices are strengthening vegetable oil’s fuel appeal. Higher blending ambitions are adding pressure on available supply.
The same report noted that rising energy prices had narrowed the gap between fossil diesel and palm biodiesel, reducing subsidy requirements in some markets and making biodiesel more attractive.
It also cited Indonesia’s move to raise its mandatory palm-based biodiesel blending rate to 50% from 40% from July 1.
But the less cheerful truth is equally important. Higher edible oil prices can lead to demand destruction in key consuming countries.
In commodities, high prices often cure high prices – not by moral persuasion, but by forcing buyers to delay, substitute, ration, reformulate or complain loudly enough for policy intervention to appear.
That is the palm oil conundrum. Prices may be supported by tight supply and expanding demand, but markets do not rise merely because we wish them to.
Buyers are not sentimental. Refiners watch margins. Consumers watch wallets. Governments watch inflation. Traders watch charts.
The market is not a palm oil appreciation society. It is a street market with Bloomberg terminals.
Beneath the price board
My broader outlook is this: global palm oil production is no longer expanding comfortably ahead of demand.
The supply side no longer enjoys the easy expansion path of earlier decades.
Land is tighter. Regulatory scrutiny is heavier. Labour is more difficult. Replanting is slow. Yields are uneven. Costs are higher. Weather has become a mischievous guest at the plantation table.
Meanwhile, demand continues to be pulled by food, oleochemicals, biodiesel, population growth, emerging markets and geopolitics.
Palm oil may be criticised loudly in some quarters, but it continues to move quietly through kitchens, factories, fuel tanks, soap, cosmetics, instant noodles and countless supply chains.
That is why any price outlook must go beyond the daily ticker. CPO prices are not merely numbers flashing on a screen.
They are signals shaped by biology, weather, labour, fertiliser, currency, freight, duties, levies, energy prices, biodiesel mandates, substitution oils, inventories, consumer demand and – never to be underestimated – human behaviour.
In palm oil, as in fashion, trends matter. But fundamentals decide whether the industry walks confidently down the runway or stumbles over its own hemline.
Still, realism is needed. Palm oil competes with soybean oil, sunflower oil, rapeseed oil and other oils. Loyalty in edible oils is often spelt L-A-N-D-E-D C-O-S-T.
Prices may be structurally supported by tight supply, but they will still swing with inventories, weather, currencies, energy prices, China and India demand, Indonesia’s biodiesel policy, Malaysian production recovery or reversal, soybean prospects, crude oil movements and the mood of fund managers who may never have walked through an estate or mill in their lives.
The real world of commodities is untidy. It has no respect for neat paragraphs.
Productivity, not just prices
The deeper issue is supply. The future cannot rest on endless area expansion. Unless governments mandate large-scale crop expansion, as seen in some countries and crops, new planted area is unlikely to be the main answer.
For oil palm, the real battle is productivity: yield intensification, better planting materials, timely replanting, fertiliser discipline, mechanisation, labour efficiency, harvesting standards, disease management and stronger estate-mill synchronisation.
In short, the industry must squeeze more intelligence out of each hectare, not merely dream of more hectares.
Supply is likely to remain tight – and may tighten further when unknowns arrive, as they often do, without first seeking permission from our budgets.
Upstream growers want better prices to offset rising costs. Millers want enough crop to keep utilisation healthy. Refiners want reliable feedstock and margins. Biodiesel players want policy certainty. Downstream manufacturers want stable supply. Consumers want affordable prices.
Governments must play the most difficult hand of all – supporting producers and other players across the supply chain, protecting consumers, managing inflation, encouraging investment and navigating policies that please one lobby while distorting the whole chain.
Help, handouts and hard arithmetic
This is where discernment is needed. Incentives have their place. They can help pioneer industries, encourage adoption, reduce early risks and support difficult transitions.
But permanent subsidies are a different creature. A business that survives only on handouts is not truly a business. Replanting assistance, grants and soft loans for smallholders may be necessary, especially where the economics are genuinely difficult. But when temporary support becomes permanent expectation, the industry risks confusing assistance with entitlement.
Help should enable renewal, not quietly replace commercial discipline. Handouts, however well-intentioned, can become toxic when they create dependency.
Help given once may draw gratitude; given twice, anticipation; given three times, expectation; given four times, entitlement; and given five times, dependency.
True help should lift stakeholders up, not make them permanent passengers. It should restore confidence, sharpen capability and open the road to independence.
Biodiesel illustrates the dilemma even more sharply. When diesel or energy prices are high relative to CPO, biodiesel economics look attractive.
It can reduce fuel import dependence, support domestic palm oil demand, strengthen downstream activity and improve energy resilience.
But the harder question comes later. What happens if energy prices ease while CPO prices remain firm, driven by stronger biodiesel mandates, steady food demand and slower supply growth?
Who carries the gap? The government? Consumers? Biodiesel producers? The plantation sector? Or does the mandate quietly retreat when the arithmetic becomes uncomfortable?
Once infrastructure is built, investments are made and expectations are created, the private sector cannot simply be told to switch off the engine.
Yet investors, having seen policy uncertainty before, may also become cautious. Once bitten, twice shy; twice bitten, they may ask for a government guarantee before even starting the lorry.
This is ultimately a question of risk appetite, policy credibility and fiscal realism. Biodiesel can be strategic, but strategy without economic honesty becomes slogan.
Downstream dreams, upstream discipline
The same supply tightness affects downstream ambition. In the past, Malaysia and Indonesia exported substantial volumes of crude palm oil, allowing importing countries to refine, value add and create jobs in their own economies.
That pattern may shift if supply tightens and producing countries decide to capture more value closer to the source.
But downstream ambition is not automatic success. Refineries do not run on speeches. Oleochemical plants do not survive on patriotism.
Value-added ventures need feedstock, capital, technology, logistics, margins, market access, branding and regulatory acceptance. I
ntegrated players – those with plantations, mills, refineries and downstream operations – will naturally be stronger because they sit closer to supply.
In a tight market, access to crop becomes power. The barrel may be round, but the value chain is not level.
So the conundrum is this: demand is broadening, supply is constrained, policy ambitions are rising, and every player wants a larger claim on the same barrel of oil.
Higher prices may feel good, but they can also hide weak fundamentals. A rising tide may lift boats, but it can also conceal rotten planks.
The future belongs not merely to those who cheer the price board, but to those who secure crop, improve yields, manage costs, invest wisely, build credible downstream value and tell the palm oil story with truth and confidence.
One eye on price, both feet in Mud
My outlook is cautiously constructive, not blindly bullish. The price hemline may rise and fall, as fashion does, but beneath the fabric, fundamentals point to tight supply and demand that keep finding new doors to knock on.
In commodities, one must dress for the season. In palm oil, one must also remember the soil beneath the runway. Price charts may glitter, but trees do not yield because traders feel bullish before lunch.
The real conundrum is not guessing the next price. It is understanding biology, policy, energy, demand, substitution and discipline – with the occasional market thunderstorm arriving uninvited.
The winners will keep one eye on the price board, one hand on the cost book and both feet in the estate mud.
Joseph Tek Choon Yee has over 30 years of experience in the plantation industry, with a strong background in oil palm research and development, C-suite leadership and industry advocacy. The views expressed here are the writer’s own.
