Lang
The Council of Palm Oil Producing Countries (CPOPC) expects palm oil production to rise this year in Malaysia, Indonesia, Honduras and Papua New Guinea compared with 2024 levels.
In its annual "Market Outlook 2025" report, the council said that although Indonesia's output is expected to recover, factors such as stagnant or declining yields, an increasing number of ageing and unproductive palm trees, and lower replanting rates are likely to limit overall palm oil production growth to a marginal level.
Wet weather conditions seen in the fourth quarter of 2024, which continued into 2025 as a result of regional weather patterns including the monsoon season and the lingering, relatively mild effects of La Niña, together with an expected shift to neutral El Niño–Southern Oscillation conditions between March and May 2025, could also affect overall production.
"Weather uncertainty will play a significant role in determining palm oil production and yields in 2025," the council said.
On the demand side, CPOPC expects strong demand for palm oil this year, driven by increased domestic use in Indonesia for biodiesel production, stock rebuilding in key importing markets such as China and India, and limited supplies of other vegetable oils such as sunflower oil.
The council expects continued growth in palm oil demand, driven by major importing markets in Asia, including ASEAN countries, as well as rising demand in Africa, particularly in Egypt, Kenya and Nigeria.
The council also expressed optimism that palm oil would remain a preferred traded commodity in 2025, continuing to trade at a premium to soybean oil. "This is supported by positive demand prospects, including festive seasons, the implementation of Indonesia's B40 programme, lower stocks in producing countries, and lower seasonal production in the coming months," it said.
As a result, palm oil is expected to trade in a range of US$1,000 to US$1,200 per tonne during the first quarter of 2025.
However, palm oil prices are expected to soften in the second half of 2025 due to the peak seasonal production cycle and the harvest season for rapeseed and sunflower.
According to data from Oil World, global biodiesel production, including hydrogenated vegetable oil (HVO), reached 64.14 million tonnes in 2024, up 8.4% from 59.18 million tonnes in 2023, with palm oil accounting for 33% of total feedstock used.
CPOPC expects the global biofuel industry to maintain positive growth in 2025, driven mainly by increased use of sustainable aviation fuel (SAF) and biofuel mandates in major vegetable oil-producing countries.
Indonesia and Brazil are preparing to further strengthen biofuel use under their domestic policies.
"Ongoing sustainability initiatives in road transport, aviation and maritime shipping are expected to support growth in the global biofuel industry," the council said.
The report noted that feedstock used in biodiesel production would see a slight increase in 2025, with palm oil use expected to rise by 3.5%, followed by used cooking oil at 1.5%, and soybean oil at 1.2%.