Palm oil prices may fall in 1H 2025 on higher supply

Market: Agriculture, Biofuels
27/02/25

Palm oil prices will likely weaken in the first half of 2025 because of growing supply and lower-than-expected demand from the biofuels sector, speakers said at the Palm and Lauric Oils Price Outlook Conference and Exhibition in Kuala Lumpur, Malaysia this week.

Bursa Malaysia crude palm oil (CPO) futures may weaken in the first half of 2025 to between 4,000-4,200 ringgit/t ($900-945/t) by July on rising output and weaker demand, according to agricultural economist and managing director of consultancy Glenauk Economics, Julian McGill. After this, prices will likely rebound as more palm oil will be consumed for biodiesel towards the end of the year, he added.

The price premium of palm oil to rival edible oils like soybean oil would therefore narrow in the first half of 2025. Palm oil has been at an unusual premium to soybean oil in the last three months, weakening demand for palm oil compared with its rival.

Major global edible oils are also at wide premiums to gasoil, which will pressure annual production of biodiesel and hydrotreated vegetable oil (HVO) in 2025 to decline by 500,000t on the year, said Oil World's executive director Thomas Mielke. This is compared with an average 3mn-4mn t year-on-year increase in biofuels output in the last four years, Mielke said.

Supplies are currently tight in most countries except for Indonesia, where palm oil stocks will start accumulating on a forecasted 2.2mn t increase in production to 47.7mn t in 2025, according to Mielke.

Some of the build-up in Indonesia may even spill over in the form of imports into Malaysia from April, McGill said. This, alongside lower-than-anticipated demand for biofuels in Malaysia after the country put on hold its 20pc biodiesel blending (B20) ambitions, may weigh on Malaysian palm oil prices.

But biodiesel monthly volume allocations for fuel suppliers are expected to be higher in the second half of 2025 as Indonesia implements its 40pc biodiesel blend mandate (B40), said McGill.

Indonesian consumption of palm oil for biodiesel is forecast to rise by 3.8mn t, against a 2.2mn t fall in exports for 2025, said the Indonesian palm oil association's (Gapki) head of foreign affairs Mohamad Fadhil Hasan. This excess consumption should then provide support for palm oil prices in the latter half of this year.

By Malcolm Goh

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23/04/25

Brazilian wildfires burn 70pc less area in 1Q

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Bio-bunker sales in Rotterdam down in 1Q

23/04/25

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23/04/25

Bio-bunker sales in Rotterdam down in 1Q

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NEa tracks first maritime CO₂ submissions

22/04/25

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22/04/25

NEa tracks first maritime CO₂ submissions

Amsterdam, 22 April (Argus) — The Netherlands Emissions Agency (NEa) has reported that shipping companies are being held financially accountable for the first time for their CO₂ emissions under the EU Emissions Trading System (ETS). The companies are now required to report their 2024 emissions and will have to surrender corresponding carbon allowances by 30 September. Of the 378 shipping companies assigned to the Netherlands by the European Commission, roughly 60pc met the initial 31 March deadline for submitting verified emissions reports. The group represents more than 1,400 vessels, around 75pc of which are operated by companies registered in the Netherlands and 25pc outside the EU. An additional 14pc of companies filed their reports after the deadline, bringing overall compliance to 74pc as of mid-April. NEa expects more reports to follow. Under the revised EU ETS , shippers have to surrender ETS allowances for 50pc of GHG emissions for extra-EU journeys. Surrender obligations for intra-EU shipping are phased in at 40pc of verified emissions reported for 2024, 70pc for 2025 and 100pc for 2026 onwards. From 2026, shipping firms will also have to report emissions of methane (CH₄) and nitrous oxide (N₂O). The EU sees the move as essential to meeting its climate targets, as shipping alone accounted for over 124mn t of CO₂ emissions in 2021, according to the commission's report. By Anna Prokhorova Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Bulk organic imports avoid US fees on Chinese ships

22/04/25

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22/04/25

Bulk organic imports avoid US fees on Chinese ships

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IMO incentive to shape bio-bunker choices: Correction

21/04/25

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21/04/25

IMO incentive to shape bio-bunker choices: Correction

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