InfoSAWIT, KUALA LUMPUR — The research firm BMI, part of Fitch Solutions, raised its projection for the average price of crude palm oil (CPO) in 2025 to RM4,320 per ton, from the previous estimate of RM4,150 per ton.
In its latest report, BMI stated that this upward revision reflects stronger import demand from India, the world's largest palm oil buyer, which continues to support prices throughout the third quarter of 2025.
As of October 27, 2025, the nearest month CPO contract on the Bursa Malaysia Derivatives Exchange closed at RM4,335 per ton, with the year-to-date average price reaching RM4,332 per ton.
India's Demand as Main Supporter
BMI reported that India's palm oil imports surged 43% quarter-on-quarter in the third quarter, now dominating 56.9% of the country's vegetable oil import share—up from 52.4% in the previous quarter.
This increase was triggered by palm oil prices being more competitive compared to soybean oil and sunflower oil. However, BMI warns that the price gap with soybean oil has been narrowing since August, potentially slowing import momentum in the coming months as soybean oil's competitiveness increases.
Nevertheless, the report affirms that palm oil remains India's main choice due to its economical price and stable supply. India's domestic consumption in the 2025/2026 season is projected to remain high, supported by low domestic stocks and an import increase of around 11.5%.
Global Production Rises, But Surplus Narrows
Globally, BMI estimates that world palm oil production will grow 1.8% to 80.1 million tons in the 2025/2026 season. Indonesia will lead the increase with production rising 3.3% to 47.5 million tons, while global consumption is projected to rise 2.5% to 78.5 million tons.
Thus, the global surplus is estimated at only 1.6 million tons, lower than 2.1 million tons in the previous cycle—indicating a tight market.
Quoted by InfoSAWIT from The Edge Market, Saturday (1/11/2025), in Malaysia, production is expected to increase slightly by 0.5% to 19.5 million tons, with peak harvest occurring in October before gradually declining until the end of the year. BMI estimates that Malaysia's CPO stocks will remain high until early 2026, amid strong production and slowing demand.
2026 Prices Projected to Decline Slightly
Looking ahead, BMI projects CPO prices to decline slightly in 2026 to around RM4,300 per ton, as short-term supply pressures ease. However, the firm assesses that prices will still hold at high levels due to long-term structural factors.
BMI highlights three main factors that will keep the market tight: slowing productivity growth, limited new land expansion, and increasingly strict sustainability standards in major producing countries like Indonesia and Malaysia.
“With a combination of structural factors and global market dynamics, palm oil prices are likely to remain at high levels in the coming years,” BMI wrote in its report. (T2)
