KUALA LUMPUR (Reuters) – Palm oil demand from top global buyers China and India is expected to increase as the vegetable oil is now reasonably priced compared to its rivals, the Malaysian Palm Oil Council (MPOC) said on Tuesday.
Palm oil is now considered “reasonably priced” at 3,900 ringgit ($889) per metric ton, the MPOC said in a statement, adding that prices are expected to remain supported at that level, underpinned by a recovery in soybean oil prices.
Crude palm oil had commanded a premium over crude soybean oil in the past year due to the tightening of supplies from supply disruption caused by floods and as Indonesia raised its biodiesel blending mandate to 40% this year.
However, supply of the vegetable oil has since improved, and output is expected to rise in the coming months, which has pressured the Malaysian palm oil contract, sending its prices down 12% this year.
MPOC said China is projected to increase its palm oil imports in May and June to replenish inventories, coinciding with the onset of the summer season, which typically sees higher palm oil consumption in the country.
“Similarly, India is expected to capitalise on the current low palm oil prices to replenish its depleted inventories, as the price gap between palm oil and soybean oil has narrowed in the domestic market,” it said.
Despite a production recovery seen in March, MPOC said total palm oil output could dip slightly to around 19 million tons in 2025, as cumulative production for the first quarter remained the lowest in three years and year-on-year production declines are likely to persist until September.
Palm oil stocks in Malaysia are expected to continue rising from April, MPOC said, but noted that the build-up will be moderate, capped by weak year-on-year production growth, particularly in the state of Sabah.
“Palm oil production in Sabah declined by 10% from January to March 2025, reaching its lowest level in five years. This production shortfall will limit inventory accumulation and help support palm oil prices,” it said.
Crude palm oil production from Sabah in 2024 amounted to 4.27 million tons, while production from peninsular Malaysia and Sarawak amounted to 10.89 million tons and 4.17 million tons, respectively.
($1 = 4.3870 ringgit)
(Reporting by Ashley Tang; Editing by Varun H K)
