Kuala Lumpur, 20 May 2025 – Malaysian palm oil production recorded a notable increase in April, rising by 298,000 tonnes compared to the previous month. This increase was partly attributed to delayed harvesting activities in early March due to the monsoon season. The increase in production during April is likely to be followed by a moderate rise from May to September, mainly due to the high base effect. In line with the rise in production, palm oil stocks also saw an increase of 303,000 tonnes, reaching their highest level in six months.
Meanwhile, the accumulation of stocks was primarily driven by subdued export performance in March and April. Sub-Saharan Africa remained the leading destination for Malaysian palm oil exports, with a 24% increase during the first four months of 2025. The ASEAN region also recorded 8% growth, while exports to other regions declined.
The vegetable oil and energy markets have experienced volatility over the past two months, driven by escalating trade tensions between the U.S. and China, as well as OPEC’s decision to increase crude oil output starting in June. This move has further dampened sentiment in the energy sector. Palm oil prices have declined by 18% since April, while soybean oil prices have risen by 7%. Crude oil prices also dropped sharply, falling 20% over the same period.
India has responded to recent price developments in the palm oil and soybean oil markets by adjusting the reference prices used to calculate import duties. In May, the effective import duty on crude palm oil was USD15 lower than crude soybean oil. The reduction in palm oil import duty is expected to enhance its price competitiveness and support higher import volumes into India, while potentially reducing demand for soybean oil imports.
Similarly, palm oil’s price competitiveness in China’s domestic market has improved significantly compared to six months ago. In December 2024, the landed price of palm olein in China was USD260 higher than soybean oil. As of 16 May 2025, the price gap had narrowed considerably to just USD51. This improved price parity is expected to drive a recovery in Chinese palm oil imports, particularly during peak summer seasonal demand period in June. Nevertheless, China’s overall vegetable oil inventory remains comfortable, standing at 1.76 million tonnes in May 2025.
Meanwhile, compressed margins in the biodiesel sector are restricting biodiesel blending to the minimum mandated level globally, dampening overall demand. In the first two months of 2025, U.S. biodiesel production declined by 24%, falling to 2.0 million tonnes from 2.7 million tonnes in the same period last year. Consumption of key biodiesel feedstocks also dropped sharply: canola oil by 57%, soybean oil by 33% and used cooking oil (UCO) by 31%. Global biodiesel production is projected to decline by 1.7 million tonnes in 2025, with the U.S. accounting for a reduction of 1 million tonnes.
In contrast, biodiesel consumption in Indonesia remained stable at 1.9 million tonnes in the first two months of 2025, a modest 2% increase from the same period in 2024. Biodiesel usage in March and April was also on track to meet the country’s annual target of 13.7 million tonnes.
Overall, the global vegetable oil market remains subdued, lacking strong bullish drivers. Weak energy prices continue to weigh on biodiesel margins globally. Looking ahead, palm oil prices are expected to remain in the range of RM3,750 to RM4,050 in May before gradually recovering. From June to September, global vegetable oil import demand is expected to shift in favour of palm oil, limiting further downside pressure on prices.
For more information on MPOC and Malaysian palm oil, visit www.mpoc.org.my
