Lang
The Malaysian Palm Oil Council (MPOC) expects palm oil prices to trade within a range of 3,900 to 4,200 ringgit per tonne during June and July 2025, after palm oil stocks in May hit their highest level for that month in a decade.
The council said in a statement that although palm oil stocks reached a record 1.77 million tonnes in May, crude palm oil prices should remain supported by strong exports, improved price competitiveness against soybean oil, and rising crude oil prices.
"This improvement was driven mainly by favourable weather conditions for harvesting operations," the council added.
The statement noted that the export recovery was underpinned by robust demand from China and India, which together accounted for 28% of Malaysia's total palm oil exports in May.
Against this backdrop, and with India recently cutting import duties, crude palm oil could become more attractive given the widening tariff gap between crude and refined oils, which currently stands at 19.25%.
Since Malaysia mainly exports crude palm oil to India, the council believes this policy shift will work in its favour. Furthermore, palm oil is currently trading at a discount of $83 per tonne to soybean oil, providing a strong cost incentive for Indian buyers.
However, production is expected to decline in June due to fewer harvesting days as a result of national and state public holidays. Vegetable oil prices also held steady during the month, supported by easing trade tensions between the United States and China.
Further price gains may be limited by rising supplies of light oils, with global sunflower and rapeseed oil production forecast to rise by 8.1 million tonnes in the coming harvest season, while strong soybean output in 2025 is expected to carry over substantial stock volumes into 2026, according to the statement.
In the United States, the rise in soybean oil prices has been driven largely by biofuel legislation favouring domestic feedstocks, alongside the Trump administration's proposal to impose biomass-based biodiesel mandates under the Renewable Fuel Standard (RFS), which would require refiners to blend biofuels or purchase compliance credits known as Renewable Identification Numbers (RINs).
The council concluded that downside risks in July appear limited, with stocks expected to remain at around 2 million tonnes, supported by strong exports and a decline in production following the April-May output peak.
Source: Al Mal Forum