26/05/2025 (The Edge Malaysia), Kuala Lumpur - SD Guthrie Bhd (KL:SDG), the world’s largest palm oil producer by acreage, said the current discount of crude palm oil (CPO) prices to soybean oil is likely to persist in the near term, driven by higher production in both Malaysia and Indonesia.

Its managing director, Datuk Mohamad Helmy Othman Basha, said Indonesia’s palm oil production is expected to grow by 5% to 10% this year, from 589,978 metric tonnes recorded in 2024.

Malaysia’s output is also projected to rise by 1% to 5% from 1.08 million metric tonnes last year, supported by improved weather conditions.

“I don’t see CPO trading at a premium [to soybean oil] happening in the immediate future,” he told The Edge after the group’s annual general meeting.

“Last year was an exception — CPO traded at an (unusual) premium to soybean oil due to supply shortages. While we enjoyed higher prices, it became counterproductive. When CPO is priced US$50 (RM210.95) to US$100 higher (premium) than soybean oil, buyers begin switching to cheaper alternatives.

“We saw this shift particularly in price-sensitive markets like India, where buyers turned away from CPO in favour of more affordable oils,” he said.

Palm oil — the world’s most abundant edible oil — has been trading at a discount to soybean oil since early April, marking the end of a rare five-month period (from November 2023 to March 2024) when CPO traded at a premium.

That period was driven by concerns over supply disruptions from floods in major producing countries and Indonesia’s decision to raise its biodiesel blending mandate to 40%.

According to Bloomberg data, the premium of soybean oil over palm oil widened to around US$242 per tonne on May 13, 2025 — the highest since Jan 15, 2024, when the premium stood at US$250.

At the time of writing on Monday, the premium of soybean oil against palm oil stood at around US$187 per tonne.

This contrasts with the period when soybean oil was cheaper than palm oil, trading at a discount of about US$100 per tonne in November and US$200 per tonne in December 2024. Between February and March this year, the discount ranged from US$15 to US$143 per tonne.

CPO futures tracked by Bloomberg showed prices peaking at RM4,463 per tonne on Feb 19, before falling more than 14% to RM3,819 per tonne at the time of writing. According to Mohamad Helmy, the average CPO price is expected to hover around RM3,900 per tonne by year-end.

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