Lang
In February 2025, the United States saw a sharp rise in import prices for palm kernel oil (PKO) driven by disruptions to global supply and shifting trade policies. Meanwhile, a report from Chemanalyst indicates that prices are set to keep climbing.
One of the key drivers behind the increase is growing demand from downstream consuming sectors, coupled with dwindling trader inventories and rising prices on expectations of reduced supply from one of the leading palm oil producers. This anticipated shortfall is adding further upward pressure on prices. Experts also note that the market has yet to feel the full impact of Indonesia's mandate for a 40% biodiesel blend, which is expected to lift palm oil demand by 1.5 to 1.7 million tonnes a year.
Given the United States' heavy reliance on imports to meet its palm kernel oil needs, these international developments are likely to fuel greater volatility in the oils market. With a supply shortfall expected from major Southeast Asian producers, prices are forecast to rise further in March 2025, affecting both businesses and consumers alike.
According to the OleoScope platform, the price of refined, bleached and deodorised (RBD) palm kernel oil (FOB Malaysia) stood at $1,870.60 per tonne for February delivery on 27 February 2025, down $29.85 per tonne from the previous session's value on 26 February 2025 ($1,900.45 per tonne), marking the lowest price of the week.
The situation is set to become more complicated following the US government's announcement of plans to impose significant tariffs on a wide range of imports, particularly from China. Although palm kernel oil is sourced mainly from Malaysia and Indonesia, broader shifts in trade policy could indirectly affect import values and supply dynamics. Experts explained that these tariffs could prompt importers to seek alternative suppliers or adjust their procurement strategies, potentially driving up operating costs that would ultimately be passed on to end consumers.