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Informist, Wednesday, Jul. 2, 2025

 

MUMBAI - The global production of palm oil is likely to reach 80.6 million tonnes in 2025-26, up 2.4% on year, according to BMI – a Fitch Solutions company. Malaysia is estimated to see a 0.5% increase to 19.5 million tonnes while Indonesia may see 3.3% rise in palm oil output to 47.5 million tonnes, it said in a report.

 

In Apr-May, Malaysia's palm oil output totalled 3.5 million tonnes, an increase of 7.8% on year. In the case of Indonesia, crude palm oil output for the first four months of 2025 reached 16.5 million tonnes, up 0.9% on year. On consumption, the report said the agency expects global palm oil consumption in 2025-26 to reach 78.3 million tonnes, representing a 1.0% on year rise.

 

The report pointed out that due to the US Environmental Protection Agency's blending proposals, the edible oil complex, primarily led by soy oil, has found significant upside support, with soy oil prices rising 10.2% in a two-week period. As a result, palm oil is now priced at a discount, which was calculated by BMI at 9.4%.

 

"This should encourage an upturn in demand from key importers such as India and Mainland China over the coming months, thereby providing a base of support for global prices," the report said. It has estimated India's consumption of palm oil to rise 1.6% on year, although its carryover stocks are set to decline rather sharply. The opening stock for 2025-26, as estimated by the USDA, was 26.7% lower on year at 1.9 million tonnes.

 

"Combined with favourable pricing relative to soy oil, we expect (India's) import demand to rise significantly, supported by USDA projections of imports reaching 8.7 million tonnes in 2025-26, up 10.3% y-o-y," it said.

 

Referring to a possible shift in global demand-supply scenario, BMI said: "We expect Indonesia's implementation of the B40 mandate (requiring 40% biodiesel blending) to significantly boost domestic demand for palm oil, thereby reducing the country's exportable volumes."

 

As a result, the agency anticipates that some demand from major importing countries will shift to Malaysia, increasing relative demand for Malaysian palm oil and lending further support to Bursa Malaysia-listed palm oil prices. The agency has retained its average price forecast for 2025-26 at 4,150 ringgit (INR 84,720.38) per tonne at Bursa Malaysia-listed crude palm oil futures contracts. At 1015 IST, the most active September contract was quoting at 4,034 ringgit, up 1.7% from the previous closing.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Abhijit Doshi

Edited by Vandana Hingorani

 

 

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