Malaysia palm oil: Biofuel mandates, El Niño to keep CPO prices elevated

Research evidence excerpt

Malaysia palm oil: Biofuel mandates, El Niño to keep CPO prices elevated

Global Markets Research

13 July 2026Malaysia palm oil

EQUITY: AGRI-RELATED

Biofuel mandates, El Niño to keep CPO prices elevated Research Analysts

ASEAN Agri-Related

Raising FY26-27F CPO prices to MYR4,400-4,500/MT with El Niño Raghavendra Divekar, CFA - NSM

impacting yields and mandates lowering exports raghavendra.divekar@nomura.com

+603 2027 6893

Raising CPO price forecasts on dual impact of Biofuel mandates and El Niño Research Associates

The recent West Asia conflict had resulted in a sharp increase in crude oil prices, leading to

ASEAN Agri-Relatedmany countries increasing their biofuel mandates to reduce dependence on imports. Indonesia

Amol Dongre - NSFSPLhas started the implementation of its B50 biodiesel mandate from 1 July 2026 and plans to fully

implement it from October. We expect this to increase Indonesia’s biodiesel consumption by

6% in 2026F and a further ~15% in 2027F, thereby reducing the quantity available for exports.

Malaysia’s expansion to B15 and Thailand’s shift to B7 is also expected to increase domestic

consumption and reduce the quantities available for exports, in our view. Additionally, we see

soybean oil prices benefiting from the US government raising its 2026 biomass-based

biodiesel mandate by 61% y-y, and Brazil’s expected launch of its B16 mandate in 2H26F.

The El Niño weather event started in June 2026, and we expect it to last through early 2027F.

It is typically characterized by lower rainfall in Southeast Asia, including the major CPO

producing countries of Indonesia, Malaysia and Thailand. We currently factor in a moderate El

Niño, which will impact overall CPO production slightly in 2026F and by about 3% in 2027F. If