Lang
The Malaysian Palm Oil Council (MPOC) said today that demand for palm oil from top buyers China and India could rise over the next two months as both countries restock ahead of the summer season, with palm oil continuing to trade at a discount to soybean oil.
The council added that China is expected to increase its palm oil imports in May and June to rebuild inventories ahead of the summer, when consumption typically picks up. India, meanwhile, is set to take advantage of current prices to replenish its depleted stocks.
"Palm oil prices are expected to remain supported over the coming weeks at around 3,900 ringgit per tonne, a level considered reasonable," the council said, noting that "this stability is reinforcing palm oil's price competitiveness as soybean oil prices recover."
Data from the Malaysian Palm Oil Board (MPOB) showed that India imported about 3.03 million tonnes of palm oil from Malaysia in 2024, accounting for roughly 18% of the country's total palm oil exports that year, followed by China with 1.39 million tonnes.
Palm oil futures for July delivery were trading at 3,915 ringgit on Bursa Malaysia Derivatives. Soybean oil on the Chicago Mercantile Exchange remained above 42 US cents per pound, or roughly $920 per tonne.
The council noted that the removal of tax incentives for imported canola oil and used cooking oil from the US biofuel supply chain could create a shortage of feedstock, boosting demand for animal fats and soybean oil.
"This suggests that global soybean oil prices have bottomed out and are expected to recover, once US biofuel policy becomes clearer in the coming months," it added.
Although soybean oil is currently trading above palm oil — a rare occurrence — the council does not expect a "strong price rally" given escalating trade tensions and weak crude oil prices.
The council warned that Malaysia's palm oil stocks could continue rising from April onwards, but noted that the build-up would be limited by weak year-on-year production growth, particularly in the state of Sabah.
It explained that palm oil production in Sabah fell by 10% during January to March 2025, hitting its lowest level in five years, which will curb stock growth.
The council forecast that Malaysia's total palm oil output would reach around 19 million tonnes this year, compared with 19.3 million tonnes in 2024.
Source: Al Mal Forum