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Demand Rises On Price Advantage
Demand for palm oil in India – the world's largest palm oil importer – rose markedly in April after five months of subdued activity, driven by lower prices and positive import margins relative to soybean oil, according to market sources speaking to Platts, part of S&P Global Commodity Insights.
Palm oil is gaining a larger share of the Indian market, as buyers favour it over soybean oil due to its lower price.
One market source said:
"Palm oil is now priced lower than soybean oil, and its import margins have turned positive, while import margins for competing products such as olein, sunflower oil and soybean oil remain negative. As a result, Indian buyers are inclined to purchase more palm oil."
Another source added:
"Indian buyers are highly sensitive to prices and margins, and given these favourable conditions, they will certainly look to rebuild their palm oil stocks, especially after months of reduced purchases."
Indian importers had previously scaled back palm oil purchases when it was more expensive than other vegetable oils on the global market.
India's palm oil imports rose to 424,599 tonnes in March, up 13.7% from February's 373,549 tonnes, although still down 38% compared with March 2024, according to data from the Solvent Extractors' Association of India.
Palm Oil Regains Price Advantage
The drop in palm oil prices is attributed to higher production and stocks in Malaysia, along with recent market volatility stemming from concerns over US tariffs, which contributed to the price decline in April.
Palm oil futures on Bursa Malaysia Derivatives fell 10.55% since the start of the month, closing at 4,035 ringgit per tonne (equivalent to $919.55) on 23 April 2025.
Palm oil is currently priced about $50 a tonne below soybean oil, a reversal from the trend seen in March 2025, when soybean oil was cheaper by roughly $70 to $100 a tonne.
Palm oil competes with other light-coloured oils for market share in the global vegetable oils market.
In the physical market, offers for May-loading crude palm oil CIF shipments to India's west coast stood at $1,065 a tonne on 23 April 2025, while June offers fell by $15 a tonne.
Platts assessed CIF west India crude palm oil at $1,055 a tonne on 23 April 2025, down 10.21% since the start of the month.
Rising Output Weighs On Prices
On the supply side, rising output in Malaysia – the world's second-largest palm oil producer – is expected to weigh on prices as the harvest season gets under way.
Data from the Southern Peninsular Malaysia Palm Oil Millers' Association showed a 7.69% increase in yield, a 0.27% improvement in the oil extraction rate, and an overall 9.11% rise in production for the period from 1 to 20 April compared with the same period in March.
Sources also indicate that supplies from Indonesia – the world's largest palm oil exporter – remain strong.
One source said:
"Indonesia is currently exporting most of its palm oil output to India."
Indonesia and Malaysia together account for around 85% of global palm oil supply.
Chinese Demand Remains Slow
Meanwhile, demand from China – the world's second-largest palm oil buyer after India – remains sluggish.
One source said:
"Vegetable oil stocks in China are low, and they will continue to restock to meet basic needs."
Another source added:
"Demand from China is very slow; they are only buying what they need."
Source: S&P Global