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Palm Oil Prices Projected to Stabilize in Q1 2025



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Palm Oil Prices Projected to Stabilize in Q1 2025

InfoSAWIT, KUALA LUMPUR – Palm oil prices are expected to range between RM4,250 and RM4,550 per ton during the first quarter of 2025, according to the Malaysian Palm Oil Council (MPOC).

Malaysian palm oil exports are predicted to experience a seasonal decline in January and February, primarily due to reduced production influenced by the monsoon season and national holidays. “We anticipate prices will strengthen after March, driven by tightening sunflower oil supplies from the Black Sea region and increasing demand from key markets,” MPOC stated, as reported by InfoSAWIT from News Straits Times on Saturday, January 25, 2025.

In December 2024, palm oil production fell by 8.3% month-on-month (MoM) and 4.2% year-on-year (YoY). Exports also decreased by 9.9% MoM and 1.4% YoY to 1.34 million tons. However, MPOC noted that this export volume aligns with figures from 2018, 2019, and 2023, which ranged between 1.3-1.4 million tons, despite palm oil being traded at a premium of US$200 per ton compared to soybean oil.

Palm oil stocks at the end of last year also saw a sharp decline to 1.71 million tons due to domestic consumption and exports outpacing production. “Demand is expected to remain high during the Lunar New Year and Ramadan celebrations, which could offset supply constraints,” MPOC added.

In 2025, Malaysia's palm oil production is projected to stabilize at 19.5 million tons, while Indonesia's production is expected to increase by two million tons to 48 million tons. However, the additional production in Indonesia is likely to be absorbed by the expansion of the B40 biodiesel program, limiting export growth from both countries.

MPOC also noted a significant decline in palm oil imports from Indonesia, which plummeted by 72% to 253,000 tons in 2024. This trend is expected to continue, keeping Malaysian palm oil stocks below average, particularly in the first quarter of 2025.

Global soybean oil prices have remained stable between US$950 and US$1,050 per ton since August 2024. This low price is expected to boost temporary export demand, thereby narrowing the price gap between soybean oil and palm oil. Additionally, U.S. biofuel policies, including potential tariffs on imports from Canada and China, could affect soybean oil demand and indirectly impact the palm oil market.

MPOC is optimistic that strong demand and global policy developments will continue to support the stability of palm oil prices in international markets. (T2)

 

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