KUALA LUMPUR (April 21): BMI, a unit of Fitch Solutions, has maintained its average annual palm oil price forecast for 2026 at RM4,300 per tonne.
In a note, it said the quarterly forecasts of RM4,173 a tonne, RM4,400 a tonne, RM4,350 a tonne and RM4,280 a tonne for the first quarter (1Q) to 4Q, respectively, reflect a first-half-of-the-year (1H2026) peak driven by conflict-related energy costs.
This would be followed by a gradual easing through 2H2026 as geopolitical risk premia fade, tempered by building El Nino concerns, it said.
“We expect front-month Bursa Malaysia-listed palm oil prices to ease from current levels towards RM4,200 a tonne through 2Q2026 under our base case conflict scenario, as the ceasefire holds, energy prices retreat and seasonal production in Malaysia and Indonesia ramps up,” it said.
BMI said the near-term price trajectory remains predominantly a function of developments in the US-Iran conflict.
Under its base case “extend to end” scenario, the firm expects prices to trend lower alongside Brent crude.
“Under escalation scenarios, prices could reach RM4,700 per tonne to RM5,300 per tonne depending on severity,” it said.
Looking to 2H2026, BMI said the rising probability of an El Nino event introduces a further source of upside risk, with risk premia likely to build ahead of any confirmed crop damage.
Beyond 2026, it expects prices to ease in 2027, as conflict- and weather-related risk factors progressively dissipate, to an annual average of RM4,200 per tonne.
However, the demand outlook remains constructive over the medium-term, underpinned by population growth across key consuming markets in Asia and Africa, and the structural expansion of biodiesel mandates in major producing countries, it added.
