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Afrinvest West Africa expects global palm oil prices to rise to $1,200 per metric tonne in 2025, compared with around $900 currently, representing a 33% increase.
The increase is attributed to higher crude palm oil prices in Indonesia and Malaysia, the world’s two largest palm oil producers, as well as strong operating fundamentals in the sector.
Afrinvest highlighted several factors behind this trend, including:
The report said: “Despite a 16.3% decline to $900 per tonne during the first five months of 2025, we expect crude palm oil prices to rise to around $1,200 per tonne by year-end.”
In 2024, global crude palm oil prices jumped by 36.2% year on year to $1,086 per tonne, their highest level since July 2022. The rise was driven by Indonesia’s B35 program, supply disruptions caused by El Niño, and stronger demand as buyers shifted away from sunflower oil because of geopolitical tensions.
Disruptions in Russia and Ukraine halted more than 70% of global sunflower oil exports last year, pushing consumers toward palm oil and adding further pressure to vegetable oil prices.
However, the price increase represents a major opportunity for Nigeria.
Alphonsus Inyang, president of the National Palm Produce Association of Nigeria, warned that the country’s heavy reliance on palm oil imports from Malaysia and Indonesia could be risky over the long term.
He said this is an opportunity for Nigeria to increase domestic production, otherwise what happened in the cocoa value chain could be repeated in palm oil.
Industry players believe Nigeria, the world’s fifth-largest palm oil producer, can benefit from the current price rally if it plants new oil palms and implements better policies to reduce illegal imports.
Nigeria produces around 1.5 million tonnes of palm oil annually, while local demand is around 1.95 million tonnes, leaving a gap of about 450,000 tonnes filled through imports.
In 2024, global crude palm oil exports rose by 1.7% to 44.2 million tonnes, with Indonesia accounting for 51.1% and Malaysia 34.9%.
The report showed that export growth was supported by resilient global demand despite challenges including logistics bottlenecks, shipping delays, and restrictive trade policies adopted by some major exporting countries such as Indonesia.
This growth reflects a recovery from previous years affected by weather conditions and points to increased investment in plantation productivity through improved seeds, better fertilization practices, and expanded use of mechanized harvesting in key producing regions.
Afrinvest concluded that this shift represents a strategic opportunity for Nigeria to revive its “red gold” by developing its struggling palm oil sector, turning it into a regional hub, and closing the annual supply gap of 450,000 tonnes.