MPOC expects palm oil demand to increase in China and India as prices become more competitive.

The Malaysian Palm Oil Council said that demand for palm oil from major global buyers China, and India will increase because the vegetable oil has become more affordable compared to its competitors.

The MPOC stated that palm oil was now "reasonably-priced" at 3,900 Ringgit ($889) for a metric ton. It added that the prices would likely remain at this level due to a rebound in soybean oil.

In the last year, crude palm oil was more expensive than crude soybean oil due to the shortages caused by flooding and Indonesia's mandate for biodiesel blends of 40%.

The supply of vegetable oil is now better, and production will increase in the next few months. This has pushed the palm oil contract for Malaysia down by 12%.

MPOC stated that China will increase palm oil imports to replenish its inventories in May and in June. This coincides with the start of summer, when palm oil consumption is typically higher in China.

The price gap between soybean oil and palm oil on the domestic market has shrunk.

MPOC stated that despite a recovery in production seen in March, the total palm oil production could drop slightly to 19 million tons by 2025. The cumulative production for the quarter was the lowest it has been in three years, and the year-on-year declines in production are likely to continue until September.

MPOC stated that palm oil stocks are expected to rise in Malaysia from April. However, the increase will be modest, with a weaker year-over-year growth in production, especially in Sabah.

Palm oil production in Sabah decreased by 10% between January and March 2025 to reach its lowest level for five years. "This production shortfall will help to support palm oil prices and limit inventory accumulation," it said.

In 2024, the production of crude palm oil in Sabah will be 4,27 million tonnes, while that from Peninsular Malaysia, Sarawak, and Sarawak's production will be 10,89 million tons each. Reporting by Ashley Tang, Editing by Varun K.

(source: Reuters)