MUMBAI: Palm oil could trade at a premium to soyoil in 2027 as El Niño threatens production and rising biodiesel demand in top exporter Indonesia tightens supplies, a senior industry official told Reuters on Tuesday.
Palm oil supplies are expected to tighten in 2027 as El Niño-induced dry weather weighs on production, potentially lifting prices above rival soyoil, as happened in 2024, Eddy Martono, chairman of the Indonesian Palm Oil Association, said.
Palm oil, mainly produced in Indonesia and Malaysia, competes with soyoil from South America and sunflower oil from the Black Sea region.
Indonesia's palm oil output in 2027 will fall 3.7% to 56.6 million metric tons, while demand for biodiesel is likely to rise 18.5% from a year earlier to a record 17.4 million tons, Martono said.
Higher domestic consumption amid lower output is expected to cut Indonesia's exports by 14.9% in 2027 to 26.5 million tons, their lowest level since 2016, he said. - Reuters
