NUSA DUA, Indonesia (Nov 13): Malaysian palm oil prices are expected to be in a range of RM4,500 to RM5,000 per tonne until April 2027 as the production cycle of oil palm fruit is expected to enter a low-yield phase in February following El Niño-induced drought this year, leading analyst Dorab Mistry said on Friday.

The benchmark palm oil contract was trading at RM4,447 as of the midday break on Friday. It has seen a sharp decline since late October as rising stockpiles in Malaysia weigh on sentiment.

Markets had expected production of palm oil to be disrupted by the El Niño-related drought, but Mistry said traders had been "too bullish too soon" over the severity of the impact and the earlier run-up in Malaysian prices was premature.

The palm oil benchmark this year rose by as much as 24% to reach this year's peak of RM5,018 per tonne in late August, before gradually declining to post around 9% gain so far this year.

Mistry, the director of Indian consumer goods company Godrej International, said palm oil production is currently in its high-yield phase despite El Niño, and the phase could last until January.

The production cycle is expected to switch directly to the low-yield phase in February, which will last until November due to the impact of drought, he added, supporting prices in the second and third quarter of next year.

Mistry expected overall palm oil production to decline by 2.7 million tonnes in 2027.

"This low cycle is likely to hurt Indonesia more due to the more severe drought. However, Indonesian palms are younger and so may not suffer as much," he said.

Overall vegetable oil production in the 2026/2027 season is expected to increase by four million tonnes, while demand is expected to rise to six million, Mistry said.

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