InfoSAWIT, JAKARTA - Several global palm oil experts project that palm oil prices will remain strong in 2025, despite ongoing challenges. Prices are expected to strengthen in the first quarter.
Amid fluctuations in the global vegetable oil market and uncertain global economic conditions, veteran palm oil price analyst and Director of Godrej International, Dorab Mistry, expressed an optimistic outlook for crude palm oil (CPO) prices in 2025.
At an international seminar attended by industry players, Mistry presented an in-depth analysis of various factors that will influence the vegetable oil market, including biofuel trends, production dynamics, and global energy and food demand.
He projected that CPO prices on the Malaysia Derivatives Exchange (BMD) for the third-month contract would trade above 5,000 ringgit per ton until June 2025. This optimism is bolstered by significant events such as the upcoming Lunar New Year and Ramadan celebrations in January-March 2025.
"This positive sentiment will be further strengthened by potential weather disruptions in South America or other regions, which could drive prices higher," he said. He also added that new announcements regarding Sustainable Aviation Fuel (SAF) could serve as an additional bullish factor supporting prices.
However, behind this bright projection, Mistry acknowledged the challenges facing the market. He noted that while palm oil production in Malaysia has shown better-than-expected improvement, production in Indonesia, initially anticipated to be lower, is also showing signs of recovery. "However, we must remember that the aging profile of palm oil plants and limited land expansion are major obstacles to increasing production," he explained.
On the demand side, Mistry revealed that global energy needs are expected to grow by about 3.5 million metric tons in 2023-2024 and increase to 4 million metric tons in 2024-2025, particularly from Indonesia, Brazil, and the US. Meanwhile, demand for vegetable oil for food is projected to grow by 2.5 million metric tons during the same period.
Nonetheless, other challenges remain. Weak crude oil prices, increasing biofuel subsidies, and excessive CPO refining capacity in Indonesia are some of the issues that need to be addressed. "Excess refining capacity makes CPO prices in the export market higher, which in turn affects the competitiveness of palm oil," Mistry added. (T2)
For detail you can read at InfoSAWIT Magazine January 2025 Edition
