Kuala Lumpur : Palm oil expected to range between RM4.4k-RM4.6k in March
Crude palm oil (CPO) prices are expected to fluctuate between RM4,400 and RM4,600 in March, influenced by competition from affordable soybean oil and lower demand from key markets like India and China. Malaysian palm oil production has hit a three-year low, but exports to emerging markets in Africa are expected to remain strong. India may increase imports to replenish stocks, supporting prices. However, a decline in biodiesel production worldwide could limit future price rallies.
KUALA LUMPUR: Crude palm oil (CPO) prices are expected to fluctuate between RM4,400 and RM4,600 in March, driven by intensified competition from the abundant and competitively priced soybean oil in the global market.
The Malaysian Palm Oil Council (MPOC) said high palm oil price and tight export supplies have impacted consumption in key markets such as India and China, particularly in the first two months of 2025.
The firm pointed out that domestic palm oil inventory fell to 1.51 million tonnes in February 2025, the lowest level since April 2023.
Palm oil production from January to February 2025 hit a three year low at 2.42 million tonnes, compared to 2.66 million tonnes in 2024 and 2.63 million tonnes in 2023.
“The decline in production was driven by harvest delays due to heavy rainfall and exhausted oil palm trees following strong production in early 2024.
“A recovery in year-over-year production growth is expected only from August onwards,” it added.
MPOC said India’s palm oil imports from January to February 2025 dropped for the first time in years, dropping to 648,000 tonnes and falling behind soybean oil imports at 727,000 tonnes.
Meanwhile, China has been importing only its core palm oil demand, averaging 300,000 tonnes per month in 2024.
Despite weaker demand from traditional markets, the firm said palm oil has remained the price leader in the first quarter of 2025, with exports shifting towards emerging markets in sub-Saharan Africa, driven by its annual population growth of 30 million.
“This trend is expected to continue throughout 2025, keeping Malaysian palm oil exports strong.” it said.
MPOC said the weak palm oil imports from December 2024 to February 2025 have sharply reduced India’s vegetable oil inventories and despite a surge in soybean oil imports, the country has only partially offset its palm oil demand.
Given this scenario, it noted that there is optimism that India will increase palm oil imports in the coming weeks to replenish stocks, which would support palm oil prices.
The firm said global vegetable oil consumption growth in recent years has been heavily driven by rising biodiesel production but the trend is expected to reverse in 2025.
Global biodiesel output is forecasted to decline by about half a million tonnes, a stark contrast to the annual increases of 3 to 6 million tonnes recorded between 2021 and 2024.
“Among major biodiesel producers, Indonesia is expected to be the only country where biodiesel production and consumption will continue to expand, while other regions are likely to experience either stagnation or contraction,” it added.
MPOC said that since the Trump administration took office, US biodiesel and hydrotreated vegetable oil (HVO) production in January 2025 has seen a notable downturn, dropping to its lowest level in 22 months, while imports have nearly come to a halt due to unclear biofuel policies.
US biodiesel and HVO production surged by 60 per cent from 10 million tonnes in 2022 to 16 million tonnes in 2024, but it is unlikely to maintain this level in 2025 due to an evolving political framework.
“Given these developments, palm oil prices are expected to trade in rangebound in the coming weeks as market participants speculate on export availability from Malaysia and Indonesia, amid a gradual production recovery from March onwards as the monsoon season concludes.
“Negative growth in vegetable oil consumption for energy purposes means any demand expansion in 2025 will need to come from food and non-energy sectors. This shift in demand dynamics could limit the potential for a price rally in vegetable oils,” MPOC added.
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Source : The Business Times
