Why these markets matter to your business right now
- Palm, sunflower, and olive oil are core input costs across food manufacturing, food retail, food service, wholesale, and agrifood trading: price moves feed directly into margins, often faster than annual contracts can absorb them.
- Across all three markets in H1 2026, prices that look stable are underpinned by fragile supply structures, thin forward coverage, and buyers operating hand-to-mouth.
- The risks are live, particularly for food manufacturers managing ingredient costs, retailers watching shelf price pressures, food service operators seeking to better protect margins, and traders assessing coverage positions.
- This article is a direct distillation of Expana’s June 2026 market outlook webinar, drawing on Expana proprietary benchmark prices, direct market player intelligence, and publicly available data from bodies including the USDA, the EU Commission, MPOB, and NOAA. You can view the full webinar here.
Commodity 01 — Palm Oil
Palm Oil: Record Malaysian stocks, crude oil linkage, and El Niño on the horizon
Price trends and the two-tier market
Palm oil is exhibiting an unusual price divergence. Expana’s palm oil crude CIF Rotterdam benchmark (CPOR) stood at approximately $1,450/mt and rising at the time of the webinar, while the Malaysia origin fob price sat at approximately $1,149/mt and falling. This gap reflects a structurally changed European market, where deforestation regulations, sustainability requirements, and declining import volumes are creating a premium for palm already landed in Rotterdam, while the originating market faces a different set of fundamentals.
EU palm oil imports are down 8.7% year-to-date, declining month-on-month. The EU market is on course to largely phase out palm-based blends, including biodiesel, around 2030. The structural demand decline in Europe is a known and continuing factor.
The crude oil connection – and its unwinding
Palm oil prices had anchored to crude oil during the US-Iran conflict, when crude moved sharply higher and biodiesel margins made palm purchasing attractive. As Brent crude pulled back (at the time of the webinar trading around $83/bbl, down more than 22% month-on-month) palm prices have started to follow. Market players noted that if a US-Iran peace deal holds, continued crude oil weakness would place further downward pressure on palm.
Malaysian stocks and the supply overhang
Malaysian Palm Oil Board (MPOB) data for May 2026 showed end stocks at their highest May level ever recorded, at 2,427,835mt, up 5.15% month-on-month. Production fell 6.96% due to Eid disruption, exports missed every pre-release estimate by approximately 100,000mt, and domestic use also fell. The result is a near-term supply overhang that has not cleared.
MPOB May 2026 data summary
- Production: 1,516,327mt (−6.96% MoM — Eid disruption, viewed as temporary).
- Exports: 1,105,760mt (−14.45% MoM — missed every pre-release estimate).
- Domestic Use: 335,492mt (−10.54% MoM — unexpected Eid drop).
- End Stocks: 2,427,835mt (+5.15% MoM — highest May level ever recorded).
Source: MPOB, Market Players.
Sentiment suggests that stocks could rise to approximately 2.5mt in June and potentially 3 million metric tonnes by August, near-record or record levels for those months. Chinese purchases remain well below prior-year levels, down 38% year-on-year. India’s refining margins for imported palm oil have been unfavourable, limiting buying interest. New Delhi is reportedly considering a vegetable oil import duty increase, which could further reshape India’s import appetite if implemented.
Indonesia’s biodiesel mandate: B50 ambition vs operational reality
Indonesia’s B50 biodiesel mandate (a 50% palm oil blend) has been widely discussed as a potential drawdown of 2–3 million metric tonnes of palm oil from export volumes. However, market players speaking to Expana were broadly sceptical that B50 will be fully achieved in 2026. The prior B45 target had not been fully realised. Infrastructure and refinery capacity constraints mean the headline mandate figure is unlikely to translate into actual export volume reduction of that magnitude in the near term.
Indonesia has also introduced an export body for palm oil, but market players reported significant uncertainty about how it will function, how contracts will be settled, and what currency payments will be made in. These structural uncertainties add a layer of operational risk for traders and buyers with Indonesian supply exposure.
Key takeaways – Palm oil
- Malaysian end stocks are at a record May high and are projected to continue rising through August — supply overhang is real and not yet clearing.
- Palm prices in the near term face downward pressure from crude oil weakness, tepid demand from China and India, and building stocks.
- EU buyers face a two-tier market where landed Rotterdam prices diverge significantly from origin prices, reflecting structural regulatory and sustainability premiums.
- Indonesia’s B50 mandate is unlikely to deliver the export drawdown often cited in market commentary — players do not believe the infrastructure is in place.
Palm Oil Forecast — Expana Forecasting Team
Palm Oil Price Forecast: Pressure is building — but not yet
Expana’s forecasting team presented a structured price outlook for palm oil at the webinar, built on a multi-layer regression methodology covering cost drivers, inventories, market watch, supply, demand, supply/demand balance, macro factors, and market-pattern interpretation.
Current position: an anti-bubble
Expana’s palm oil regression model plots the actual crude palm oil price against a “fair value” band derived from historical fundamentals. The model currently shows palm oil prices sitting below the fundamental fair value band, in what the forecasting team describes as an “anti-bubble”: prices that are unsustainably low relative to what supply, demand, and inventory data would justify.
Forecasting team conclusion
Palm oil prices are currently in an anti-bubble: unsustainably low relative to fundamentals. At the same time, the fundamental fair-value band itself is trending upward. Based on our analysis, both conditions could add to upward pressure over the medium term.
Supply/demand and inventories: both point upward
The USDA’s world palm oil supply/demand balance is projected to decline over the forecast period, and historically, when this balance falls, prices rise. World palm oil inventories, adjusted for consumption, are also projected to decline into 2027 according to USDA data, adding further upward structural pressure. The forecasting team noted that while Malaysian stocks are currently rising (a near-term complication), world inventories are on a declining trajectory, and the two signals do not cancel each other out.
El Niño: confirmed, but the price impact is delayed
El Niño was confirmed on 11 June 2026, with NOAA attributing a 63% probability of a very strong event. The 2015/16 El Niño caused Malaysian palm yields to fall 13% to 3.69 MT/HA and Indonesian yields to fall 10% to 3.11 MT/HA. CPO prices subsequently rallied approximately 81% over 14 months, from MYR 1,820 at the August 2015 trough to MYR 3,300 by December 2016.
However, Expana’s forecasting team is explicit on a critical point: the production impact of El Niño lags its onset by 6–10 months. Yield losses are unlikely to appear in production data before H2 2027. In the near term, H2 2026, El Niño is historically associated with downward price pressure, not upward, as the event itself does not immediately tighten supply.
The single indicator Expana's forecasting team is monitoring
Expana’s forecasting team is monitoring USDA supply/demand forecast revisions most closely. El Niño is already partly priced in. A meaningful upward price move could be triggered when the USDA revises its supply/demand balance downward in response to production data. Once that revision occurs, and El Niño peaks and begins to decline, the production impact could feed through to prices more sharply. The USDA forecast — rather than the weather event itself — is the key signal our team is tracking.
Price-pattern outlook: Sideways, but tilted upward
Expana’s analysis of price patterns shows CPO prices have traded in a broadly sideways range since 2023, a roughly four-year consolidation with a slight upward tilt. Based on prior price behaviour, our models suggest palm oil could see a modest upward move (potentially around 23% from current levels), followed by a pullback. A more substantial price move, driven by El Niño’s production impact, is anticipated in early 2027.
Key takeaways – Palm oil forecast
- Based on our analysis, palm oil prices could be fundamentally undervalued, but near-term supply overhang and El Niño timing dynamics are suppressing any immediate sharp rally.
- A moderate near-term increase could follow, before a decline, ahead of the El Niño production impact in H2 2027.
- The production-data lag means any price move could materialise only once stocks are already tightening — so El Niño headlines may arrive alongside, not ahead of, a repricing market.
- 2026 could hit a tighter market than 2015: Indonesia’s B50 mandate pre-commits domestic supply before El Niño losses even materialise, compressing export availability ahead of the yield impact.
Commodity 02 — Sunflower Oil
Sunflower Oil: A market frozen in place — but for how long?
Price trends
Expana’s sunflower oil fob NW Europe benchmark (SFOR) stood at $1,489.50/mt at the time of the webinar, down week on week. Despite this slight softening, prices remain significantly elevated relative to five- and ten-year averages. EU buyers have been absent from the market for weeks.
Trading houses have quietly been accumulating cargoes at current price levels, building forward positions for August through December 2026, and in some cases into 2027. This is unusual. Normally, major industry players, not traders, would be holding long coverage at this stage. The fact that traders are stepping in suggests end-user coverage is thin, and that when EU buyers return, they may find available volumes concentrated in fewer hands, with those hands looking for a margin.
Supply: The headline number masks the real picture
The USDA projects global sunflower seed production at a record 61.8 million metric tonnes in 2026/27. But market players speaking to Expana are clear: the question is not how much is being grown, it is how much is reaching the market.
Ukrainian farmers are holding supply rather than selling into the market. Crushers are unwilling to chase at current prices given weak demand, creating a stalemate. Ukraine is projected to produce 13.5–14 million metric tonnes next season, potentially as high as 14.5mt according to some market contacts, but crush capacity utilisation is well below its potential of approximately 20 million metric tonnes.
Russia’s crop is projected by the USDA at 19.5mt and could exceed 20mt. Russia continues to export substantial volumes to India and China. However, a Russian export duty reduction of 71% month-on-month in June provided only marginal price relief (the indicative price moved by approximately $0.50) and the duty mechanism is locked in until August 2028, limiting flexibility.
The Argentine complication
Argentina was widely expected to act as a supply relief valve, with production projected at a record approximately 8 million metric tonnes in 2026/27. Instead, it has become an additional source of procurement risk for EU buyers. Bulgaria’s Food Safety Association (BFSA) flagged 10 consecutive Argentine shipments for excessive pesticide residues: deltamethrin at four times EU legal limits and malathion at five times. Market players describe this as systemic, not isolated.
Procurement risk flag
Argentine volumes flagged for EU standards are being redirected to India and Egypt, which can also absorb Russian supply. This creates a circular supply problem for EU procurement teams. Ukraine, operationally uncertain, becomes the default cleaner origin, but supply from there is bottlenecked at farm level.
Weather: A live downside risk on EU crop
EU sunflowers are currently at flowering stage, a critical growth phase. European Drought Observatory (EDO) data shows crops entered this heat event already under stress. EU crop forecasts carry a 1 million metric tonne uncertainty gap between the USDA’s 9.9mt projection and the European Commission’s 8.9mt. Any further weather-driven downward revision to EU yields would hit a market already short on forward coverage.
Key takeaways – Sunflower oil
- EU buyers are absent but their pipelines will need filling. When they return, they may find traders holding forward volumes and expecting a margin.
- Argentine origin is effectively unavailable for EU-standard procurement. Ukraine is the logical alternative but is operationally constrained.
- A 61.8mt global record crop does not resolve the market if supply is locked on Ukrainian farms and EU crops face live weather risk.
- Forward coverage across the industry is well below normal seasonal levels, leaving buyers exposed to repricing if any of the above risks materialise.
Commodity 03 — Olive Oil
Olive Oil: Structurally tight, behaviourally complacent
Price trends
Expana’s benchmark price for Andalusian extra virgin olive oil stood at €3.95/kg as of 17 June 2026, down 5.86% month-on-month, and significantly below the peaks seen during the 2022–2024 drought-driven supply crisis, when prices reached above €8/kg. Italian extra virgin olive oil prices (Expana benchmark WJ43) have followed a similar downward trajectory, though at a premium above Spanish levels.
Price action has been described by market players as demand-driven: buyers are not in a rush to cover, and the perception of comfortable supply has suppressed urgency. This is despite underlying stock levels that tell a more concerning story.
Spain: The supply picture behind the price
Spain is the world’s largest exporter of olive oil. Between the 2022 and 2024 marketing seasons, Spanish production fell to historical lows due to multi-year drought during olive flowering, causing a severe price shock across the whole complex. A supply recovery in 2024/25 brought prices back down. But the recovery has not rebuilt stock buffers.
Spanish ending stocks are on course to conclude the current season at less than half the 10-year average carryover level, and that average itself incorporates the abnormally low-stock years of the drought period. Between April and May 2026 alone, ending stocks fell by approximately 10%. The 2025/26 season’s production forecast is 3% below the prior year.
Structural tightness: What it actually means
Expana’s market reporters use the term ‘structural tightness’ to describe a specific market condition: not an immediate supply emergency, but an environment with very little room for error. In the current olive oil market, that manifests as:
- Buyers operating hand-to-mouth, purchasing only when the pipeline requires it, in short, urgent time frames.
- A lack of forward coverage across the market, leaving the bulk of buyers exposed if prices move.
- Low stocks that could deteriorate further if the new Spanish crop disappoints, which current weather and stock drawdown data suggest is a real possibility.
- A price environment partially supported by Tunisian import supply, which acts as a ceiling only for buyers who do not require EU-traceable or certified-origin oil.
Key risk for food manufacturers and retailers
The hand-to-mouth demand pattern that has kept prices low is the same dynamic that produces price shocks. When a supply catalyst hits, buyers who have not covered will move simultaneously, amplifying the upward correction beyond what fundamentals alone would justify.
Italian and premium-segment exposure
Italian extra virgin olive oil represents the premium end of the market. For food manufacturers and retailers sourcing high-quality, EU-traceable, or organic extra virgin olive oil, particularly for branded product lines or out-of-home food service applications, the risk is asymmetric. Tunisian supply does not substitute for certified EU-origin oil. If Spanish supply tightens, premium EU oils are fully exposed, with no importable alternative.
Tunisia: the ceiling is eroding
Tunisian supply has acted as a price ceiling for the bulk olive oil market. But early 2026/27 season production forecasts for Tunisia are substantially lower, at approximately 46% below the prior season. If this reduction has not yet been priced in, it could act as an independent price catalyst before any European supply weakness emerges.
Key takeaways – Olive oil
- Prices are historically low, but structural tightness means the market has limited capacity to absorb a supply shock without a sharp correction.
- Buyers in EU-traceable and premium segments have no Tunisian supply alternative. They are fully exposed to European market dynamics.
- Tunisian production for 2026/27 is forecast 46% lower, which could remove the current price ceiling independently of European crop performance.
- The new Spanish crop carries live downside weather risk, and stock drawdowns in April–May suggest the buffer is thinner than the headline price implies.
Conclusion: Three markets, one shared risk
Palm oil, sunflower oil, and olive oil each have distinct supply dynamics in 2026. But they share a common structural risk that procurement, category management, and sourcing leaders should not overlook: across all three markets, forward coverage is thin, buying is hand-to-mouth, and the signals of underlying tightness are not yet fully reflected in prices.
In palm oil, the world’s most traded vegetable oil is priced below its fundamental fair value on our analysis (an anti-bubble), while El Niño approaches with a production impact that could arrive later than most commentary assumes, but harder than most positions account for. In sunflower oil, a record headline crop masks supply physically locked on Ukrainian farms, with Argentine volumes compromised for EU procurement, and EU buyers absent from a market quietly being cornered by trading houses. In olive oil, prices that look historically attractive are sitting on ending stocks less than half the 10-year average, with Tunisian supply about to become significantly less available and the new Spanish crop facing live weather risk.
For food manufacturers, food retailers, food service operators, and traders, the risk in each of these markets is not that prices are rising today. It is that when they do move, and the conditions are in place across all three for that to happen, the buyers who have not covered will be chasing the same volumes at the same time.
Expana monitors all three markets through proprietary benchmark prices, daily analyst coverage, and a separate forecasting team providing price projections and hedging indicators. All data cited in this article is sourced exclusively from Expana’s price reporting and forecasting teams, the USDA, and the EU Commission.
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Legal Disclaimer
This article is based on Expana’s Oilseeds and Oils Market Outlook Webinar, June 2026. This commentary is prepared by Expana and its group of companies, neither of which is an investment firm. We have no positions in the commodities or derivatives referenced. No information in this article constitutes investment or financial advice, and the views expressed are for information purposes only. For further information, see our disclaimer: https://www.expanamarkets.com/disclaimer/. Market data is drawn from Expana proprietary benchmarks and publicly available sources as presented in the webinar. Any use of or reliance upon this information is made entirely at the reader’s own risk. © 2026 Expana Markets. All rights reserved.
Written by Expana
