New Straits Times (21/01/2025) - KUALA LUMPUR: Palm oil prices are expected to trade between RM4,250 and RM4,550 per tonne in the first quarter of 2025, according to the Malaysian Palm Oil Council (MPOC).

The council also expects Malaysia's palm oil exports to fall seasonally in January and February, primarily due to reduced production impacted by the monsoon season and public holidays.

"We expect prices to strengthen after March, driven by tightening sunflower oil supplies from the Black Sea region and ongoing demand from major markets.

"Export availability and biofuel policies in the US and Indonesia will remain key factors influencing price movements," MPOC said today.

Palm oil production in December fell 8.3 per cent month-on-month (MoM) and 4.2 per cent year-on-year (YoY), MPOC said. Exports dropped 9.9 per cent MoM and 1.4 per cent YoY to 1.34 million tonnes.

Despite the declines, MPOC said the export volume in December was still consistent with the levels seen in 2018, 2019 and 2023, ranging from 1.3-1.4 million tonnes.

This is especially considering that palm oil was traded at US$200 per tonne premium over soybean oil in December.

MPOC said by the end of last year, inventories had declined sharply to 1.71 million tonnes due to strong domestic and export consumption exceeding production.

"Demand, however, is likely to remain robust during the Chinese New Year and Ramadan celebrations, potentially offsetting the supply constraints," it added. 

For this year, MPOC said Malaysia's palm oil production is projected to stay stable at 19.5 million tonnes, while Indonesia's output is expected to recover by two million tonnes to 48 million tonnes.

However, the council said the additional production in Indonesia will likely be absorbed by its expanded B40 biodiesel programme, limiting export growth from both countries. 

MPOC also pointed to a significant reduction in palm oil imports from Indonesia, which dropped  72 per cent to 253,000 tonnes in 2024.

"This trend is expected to persist, keeping Malaysia's palm oil stock levels below average, particularly in the first quarter of 2025," it said. 

On global competition, MPOC said soybean oil prices have remained stable between US$950 and US$1,050 per tonne since August 2024, despite market challenges.

"The current low prices are expected to boost export demand temporarily, narrowing the price gap between soybean oil and palm oil," it added.

Additionally, evolving US biofuel policies, including potential tariffs on Canadian and Chinese imports, could influence soybean oil demand and indirectly affect the palm oil market. 

Read more at https://www.nst.com.my/business/economy/2025/01/1163877/palm-oil-may-trade-rm4250-rm4550-tonne-2025-mpoc