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Analysts believe Malaysian crude palm oil prices are unlikely to benefit from the decline in US soybean prices, which have been heavily affected by the trade war between the United States and China.
China is the largest buyer of US soybean exports, which were valued at US$27 billion (equivalent to 119.8 billion ringgit). US soybeans currently face tariffs of up to 94% when entering the Chinese market.
According to a research note from TA Securities, China is unlikely to increase its demand for palm oil amid the trade dispute, as palm oil cannot replace soybeans in animal feed due to differences in nutritional properties and functionality.
The note added that the situation could in fact lead to a decline in palm oil demand, particularly if countries such as India begin purchasing more US soybeans as part of trade deals with the United States. TA expects crude palm oil to average 3,800 ringgit per tonne in 2025.
Since January 2025, crude palm oil prices have fallen 6.6% to 4,500 ringgit per tonne, with a year-to-date average of 4,710 ringgit.
Palm oil futures also slid to a six-month low, the weakest level since October 2024, weighed down by falling soybean oil and crude oil prices following the announcement of new US tariffs.
In the same vein, CIMB Securities, which holds a short-term bearish view on palm oil prices, noted that lower crude oil prices make biodiesel production less economically viable, adding further downward pressure on palm oil prices. It added that improved palm oil supply in the second quarter of 2025, driven by better weather conditions and seasonal factors, is an additional factor pushing prices lower.
CIMB forecasts crude palm oil to average 4,200 ringgit per tonne in 2025, but noted that prices in the second quarter will be weaker than in the first quarter due to rising supply.
Malaysian palm oil stocks also rose in March, the first increase after five consecutive months of decline, driven by higher production and imports alongside weaker exports.
Source: Bernama