KUALA LUMPUR (Jan 14): The Malaysian Palm Oil Board (MPOB) is expecting tight global supply, partly due to Indonesia's upcoming B40 biodiesel mandate, to keep crude palm oil (CPO) prices firm in 2025.
“With low opening palm oil stocks and strong prices setting the stage, 2025 is projected to be a promising financial year for the industry. This outlook reflects a positive performance for 2025,” said MPOB director general Datuk Dr Ahmad Parveez Ghulam Kadir said at the Palm Oil Economic Review & Outlook Seminar (R&O) 2025.
He is expecting CPO prices to average between RM4,000 and RM4,300 per tonne this year. CPO prices averaged at RM4,179.50 per tonne last year, from RM3,809.50 per tonne in 2023. The highest monthly average CPO price last year was RM5,119.50 per tonne in December 2024, while the highest daily recorded was RM5,333.50 per tonne on Dec 6.
At the time of writing on Tuesday, the benchmark third-month delivery was trading at RM4,496.
Indonesia's B40 mandate was initially scheduled to take effect on Jan 1, 2025, but its implementation has been postponed due to infrastructure adjustments and technical considerations. The mandate is expected to significantly reduce the availability of palm oil for the export market, further tightening global supply, Ahmad Parveez noted.
MPOB is also expecting the anticipated rise in biodiesel demand in the US, which will add pressure to global vegetable oil supplies. In addition, changes in US crop production, with farmers shifting acreage from soybean to corn, could exacerbate the tightening of global vegetable oil inventories, said Ahmad Parveez.
MPOB forecasts that Malaysia’s CPO production will increase slightly, from 19.34 million tonnes in 2024 to 19.5 million tonnes in 2025. Palm oil stocks are projected to remain below two million tonnes throughout the year, which is expected to also support firm CPO prices.
“We are aiming to boost our palm oil exports from 16.9 million tonnes in 2024 to 17.3 million tonnes in 2025, with a marginal improvement in yield. We do not anticipate significant increases in imports, so stocks may decline from 1.7 million tonnes to around 1.6 million tonnes,” Ahmad Parveez noted.
The MPOB also reiterated its commitment to environmental concerns, economic stability, and social responsibility within the palm oil industry. “The ministry and agencies will continuously collaborate closely to address environmental concerns while also promoting economic stability and social responsibility within the industry, ultimately fostering a more sustainable and balanced future,” he added.
