Lang
Fitch Ratings has raised its assumptions for Malaysian benchmark crude palm oil (CPO) prices from 2025 onward. However, the agency still expects prices to decline as palm oil supply improves.
Fitch raised its benchmark price assumption to $800 per tonne in 2025, compared with a previous estimate of $750 per tonne. It now assumes an average price of $700 per tonne thereafter, compared with $650 per tonne in earlier forecasts.
These higher assumptions reflect a slower recovery in Indonesian production and increased biodiesel consumption in the country. Fitch said its higher long-term assumptions are also based on cost inflation and expectations of limited new land expansion for oil palm cultivation.
Palm oil prices rose sharply in the fourth quarter of 2024 due to lower production in Indonesia and Malaysia, in addition to expected demand growth following Indonesia’s increase in biodiesel blending rates in 2025.
Fitch expects crude palm oil production to rise in 2025, supported by a weak La Niña weather pattern. The agency also believes CPO prices will face pressure in the coming months due to competition from soybean oil, which has become cheaper.