Lang
BMI, a unit of Fitch Solutions, has raised its 2025 average price forecast for the front-month crude palm oil contract on Bursa Malaysia to 4,320 ringgit per tonne, up from its previous forecast of 4,150 ringgit per tonne.
In its latest outlook, BMI said the upward revision reflects stronger-than-expected import demand from India, the world's largest palm oil buyer, which supported prices throughout the third quarter. As of 27 October, the front-month crude palm oil contract settled at 4,335 ringgit per tonne, bringing the year-to-date average to 4,332 ringgit per tonne.
BMI reported that India's palm oil imports rose 43% quarter-on-quarter in the third quarter, accounting for 56.9% of India's edible oil imports, up from 52.4% in the previous quarter.
The increase was driven by palm oil's favourable pricing relative to soybean oil and sunflower oil. However, BMI cautioned that the price gap with soybean oil has narrowed since August, which could slow imports in the coming months as soybean oil gains greater competitiveness.
The report added that while Indian demand may ease after the festive season, palm oil remains competitively priced and is still expected to retain a significant share of the edible oil market.
BMI said the country's consumption is likely to remain strong in the 2025/26 season, supported by lower domestic stocks and an expected 11.5% rise in imports.
Globally, BMI expects palm oil production to rise 1.8% to 80.1 million tonnes in the 2025/26 season, led by a 3.3% increase in Indonesian output to 47.5 million tonnes. Global consumption is projected to grow 2.5% to 78.5 million tonnes, narrowing the surplus to 1.6 million tonnes, compared with 2.1 million tonnes in the previous cycle.
In Malaysia, production is expected to rise 0.5% to 19.5 million tonnes, with output projected to peak in October before easing seasonally through the end of the year.
BMI said strong production and moderate demand are likely to keep Malaysian stocks elevated until early 2026.
Looking ahead, BMI expects prices to ease slightly in 2026 to 4,300 ringgit per tonne, as near-term supply pressures ease, though long-term structural constraints continue to underpin higher prices.
The firm noted that slowing yield growth, limited land expansion, and rising sustainability standards in key producing countries will keep the global market tight over the next few years.
Source: Al Mal Forum