Global palm oil market continues to exhibit significant activity as of January 20, 2025. Driven by critical policy changes, supply dynamics, and shifting consumer preferences, the market has experienced notable fluctuations in pricing. The global benchmark price for crude palm oil (CPO) currently remains stable at approximately MYR 5,251.88 per metric ton, as projected by Trading Economics. Analysts predict that this level will persist in the short term, given the balance between supply and demand.
Indonesia, as the world’s largest palm oil producer, has introduced a higher biodiesel mandate, B40, beginning in January 2025. This policy is designed to allocate a larger share of domestic CPO for biodiesel production, effectively tightening the volume available for export. Although the full implementation of the policy is expected to be gradual, it has already contributed to global supply constraints, supporting higher price levels. Additionally, global production of palm oil has seen only a modest increase of 2.3 million metric tons for the 2024/2025 season. Factors such as aging plantations, unpredictable weather patterns, and sustainability initiatives in major producing countries continue to limit significant growth, maintaining a constrained supply environment.
In markets such as India, palm oil has encountered stiff competition from soybean oil, which is currently trading at a discount. Indian palm oil imports have reached a five-year low in January 2025 due to negative refining margins, further influencing global demand trends. Despite these challenges, palm oil’s critical role in the global vegetable oil market ensures its continued relevance.
Analysts anticipate that palm oil prices will remain within a range of MYR 4,000 to MYR 4,500 per metric ton throughout 2025. The tightening of global supply, coupled with stable demand, is expected to minimize volatility unless significant disruptions occur. However, this price projection serves as a long term outlook and remains subject to supply chain dynamics, which could introduce unforeseen fluctuations. For stakeholders, particularly those in leadership roles, this environment underscores the importance of proactive planning and strategic positioning to navigate the evolving market landscape effectively.
Source:
Projections of the global benchmark price for crude palm oil (CPO) at MYR 5,251.88 per metric ton https://id.tradingeconomics.com/commodity/palm-oil
Insights into Indonesia’s B40 biodiesel policy and its gradual implementation in 2025, along with its impact on global supply. https://www.reuters.com/business/energy/indonesias-higher-biodiesel-mandate-rollout-may-be-gradual-industry-watchers-say-2024-12-18/
Analysis of global palm oil production, which is expected to increase by 2.3 million metric tons in the 2025 season.
https://ukragroconsult.com/en/news/early-look-at-2024-25-south-american-crop-production/?