Global Palm Oil Supply Forecast to Decline in the Second Half of the Year

22-Apr-2026 01:34 PM

Mumbai. Indonesia—the world's leading producer and exporter of palm oil—has decided to implement a regulation (the B50 Program) mandating a 50 percent blend of Crude Palm Oil (CPO) in biodiesel production, effective July 1, 2026. This move is expected to reduce the country's exportable stock of palm oil, thereby complicating the supply and availability situation in the global market.

According to the Solvent Extractors' Association of India (SEA), the implementation of the B50 Program in Indonesia, coupled with the prevalence of the El Niño weather cycle and ongoing geopolitical tensions, could lead to a contraction in the palm oil market. Consequently, there is also a possibility that prices may witness some upward momentum.

Indonesia and Malaysia are the world's two most prominent producers and exporters of palm oil. Global annual palm oil production stands at approximately 82 million tonnes. India imports an average of 9 to 9.5 million tonnes of palm oil annually to meet its domestic requirements.

This year, the implementation of the B50 Program in Indonesia, the B15 Program in Malaysia, and the B20 Program in Thailand is likely to result in a decline in the global palm oil export trade. The impact of the El Niño weather cycle is expected to be felt across South Asia (specifically India), as well as Southeast Asia and the Far East (including Thailand, Malaysia, and Indonesia). This could potentially disrupt palm oil production in these regions.

This situation is unfolding at a time when India's dependence on imported edible oils remains significantly high, and domestic prices for these commodities are currently trending upwards. While palm oil imports have declined in recent months, there is an anticipated need to increase them in the near future.