Global palm oil production in the 2025/26 season is forecast to increase by 1.5 million metric tons, with output from the two major producers Indonesia and Malaysia seen increasing only slightly, leading industry analyst Dorab Mistry said on Friday.

He forecast benchmark palm oil futures on Bursa Malaysia could reach 5,500 ringgit per ton in the January-to-March quarter, maintaining his September outlook, if Indonesia continued to seize plantations and pushed on with plans for a higher mandatory biodiesel blend.

Indonesia plans to implement a 50% biodiesel blend, known as B50, in the second half of 2026. The government expects to start road tests for the fuel next month.

“If Indonesia goes to B50, there will be shortages of palm oil and prices will rocket,” Mistry, a director of Indian consumer goods firm Godrej International, told an industry conference in Bali.

The Indonesian government’s plantation seizures could pose a production problem next year, he said.
Source: Reuters