Palm oil to hold above RM4,400 on supply risks, biodiesel demand — MPOC
21/10/2025 (The Edge Malaysia), Kuala Lumpur - Crude palm oil (CPO) prices are projected to hold steady above RM4,400 per tonne through the remainder of 2025, supported by tightening global vegetable oil supplies and lingering uncertainty over Indonesia’s potential biodiesel mandate expansion, according to the Malaysian Palm Oil Council (MPOC).
The projection comes a month after the council said prices were likely to trade between RM4,200 and RM4,500 per tonne in the near term, supported by firm global vegetable oil markets and supply uncertainties.
The MPOC said palm oil’s price premium to soybean oil has re-emerged in global markets, with palm oil trading about US$42 (RM177.32) per tonne higher in Europe and US$26 (RM109.77) higher in India as of mid-October.
“Vegetable oil prices are expected to remain firm through the remainder of 2025, supported by strength in palm and soybean oil,” MPOC said in a statement on Tuesday (Oct 21).
However, market sentiment remains cautious amid weak crude oil prices, high vegetable oil inventories in major markets like China and India, intensifying trade tensions and a buildup of global soybean stocks, it said.
Exports of Malaysian palm oil rose by 102,000 tonnes or 7.7% month-on-month to 1.42 million tonnes in September, led by strong demand from South Asia, particularly India, where shipments surged to an 11-month high of 312,000 tonnes.
Palm oil inventories climbed to 2.36 million tonnes, the highest in 22 months, even as export growth outpaced production.
The increase was mainly attributed to domestic consumption normalising to 300,000–350,000 tonnes per month after hitting a record 499,000 tonnes in August, alongside a 33.9% rise in imports.
Meanwhile, speculation over Indonesia’s proposed B50 biodiesel programme remains a key price driver, the MPOC added.
The mandate, if implemented, could require about 17 million tonnes of palm oil for blending — roughly three million tonnes more than under the current B40 rule — and cut exportable supply by as much as six million tonnes.
“This [B50 mandate] would result in a notable decline in exportable supply, as Indonesia has historically exported between 24 and 28 million tonnes of palm oil annually over the past five years," the council said.
Globally, palm oil’s firm tone is reinforced by shrinking soybean oil exports from the US and Brazil, which are expected to fall 41% year-on-year to 1.6 million tonnes in 2025/26, amid stronger domestic biofuel demand.
Argentina’s temporary export tax exemption in late September also triggered heavy forward soybean sales to China, likely curbing near-term crushing activity and limiting soybean oil availability.
MPOC went on to note that sunflower oil prices have remained elevated despite harvest progress in the Black Sea region, trading at about US$1,360 per tonne in mid-October, which is roughly US$75 above palm oil and US$100 higher than soybean oil.
Meanwhile, the ongoing US-China trade conflict is adding further uncertainty. MPOC noted that China has halted soybean imports from the US since May while Washington’s 45Z biofuel policy, which prioritises domestic feedstock use from 2026, could deepen the imbalance between domestic demand and export capacity.