Lang
Analysts expect crude palm oil to remain cheaper than soybean oil until the third quarter of 2025, according to a report published by The Edge Malaysia.
According to the report, published on 21 April, the five-month period during which crude palm oil traded at a premium to soybean oil came to an end in April, triggering a modest rise in Indian palm oil imports as its relative price fell.
Analysts also noted that Chinese demand for palm oil could increase as a result of the US-China trade war, which may affect shipments of American soybeans to China.
Ivy Ng Lee Fang, head of research at CIMB Securities, said palm oil's discount to soybean oil is likely to persist until the third quarter, given that production is expected to keep rising until at least October. She added:
"As long as supply keeps growing, we expect palm oil to remain price-competitive against other vegetable oils."
A senior trader at IcebergX said the discount could last until September, when soybean oil production typically begins its seasonal increase.
The report noted that the vegetable oil market is awaiting clarity on US biofuel policy, since soybean oil is used to produce biodiesel, which could affect the volumes available for other uses.
Dr Sathia Varqa, editor of Fastmarkets Palm Oil Analytics, added that the US-China trade war is supporting soybean prices, prompting China to shift its purchases towards Brazil rather than the United States.
A trader at IcebergX said palm oil prices could range between 4,400 and 4,600 ringgit (US$1,006–1,051) a tonne during the fourth quarter, with the full-year average expected at around 4,300 ringgit (US$983).
Jacqueline Yow, an analyst at CGS International, said the drop in palm oil prices has helped boost demand from India, the world's largest importer of the commodity. She said:
"From late March to early April, we saw buying interest from India, which is more price-sensitive. If these price trends continue, we could expect a further pickup in demand."
According to data from the Malaysian Palm Oil Board (MPOB), India imported 3.03 million tonnes of Malaysian palm oil in 2024, accounting for 17.9% of Malaysia's total exports.
Palm oil typically trades at a discount to soybean oil for most of the year, except for a brief period in March or April, the report said.
However, from December through to last March, palm oil traded at a premium to soybean oil for an unusually long stretch, with the gap at times exceeding US$100 (441 ringgit) a tonne.
This price strength was reinforced by supply concerns from the two leading producers, Malaysia and Indonesia, as well as Indonesia's implementation of its B40 biodiesel mandate, which requires a 40% palm oil blend in diesel fuel.
But this trend reversed in the weeks before the report was published, with soybean oil regaining its price premium by a margin of US$36 (157 ringgit) a tonne.
Source: The Edge Malaysia