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Informist, Friday, Oct. 17, 2025

 

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--Palm oil council's Gunalan: 2025 global palm oil prices $900-$1,100/tn
--CONTEXT: Council of Palm Oil Producing Countries' Gunalan in interview
--Palm oil council's Gunalan: See 2026 global palm oil prices $900-$1,200/tn
--Palm oil council: 2026 world palm oil output 82-83 mln tn vs 82 mln 2025
--Palm oil council: Indonesia 2025 palm oil output may exceed 50-mln-tn aim
--Palm oil body: See Malaysia meeting 2025 palm oil output aim of 19.5 mln tn
--Palm oil body: Indonesia's B50 aim unlikely to reduce palm oil exports
--Palm oil body: No major jump in palm oil demand if Indonesia goes for B50
--Palm oil body:Indonesia palm oil demand seen up 1-2 mln tn on B50 adoption
--Palm oil body: See India shifting to palm oil again if soyoil prices rise
--Palm oil body: See India 2026 palm oil imports 4-5 mln tn vs 3 mln tn 2025
--Palm oil body: BMD CPO futures unlikely to repeat Apr 2022 record high
--Palm oil body: See India 2025 RBD palmolein import lower YoY on high duty
 

 

By J. Navya Sruthi and Taniva Singha Roy

 

MUMBAI – Although demand for edible oil in India has recently seen a shift from palm oil to soyoil, it will be temporary. It may happen when palm oil prices rise. However, this may not become a trend as major soyoil exporting nations are focusing on implementing biodiesel policies. Countries like the US and Brazil implementing biodiesel programme will not be able to export huge amount of soyoil, Director of Policy and Strategy at the Council of Palm Oil Producing Countries, Chandran Gunalan, told Informist in an Interview.

 

The Council of Palm Oil Producing Countries is an intergovernmental organisation with member countries such as Indonesia, Malaysia, Honduras, Papua New Guinea, and Democratic Republic of the Congo. It promotes cooperation among palm oil-producing nations through activities focused on sustainability, research, trade policy, and smallholder productivity. Its goals include fostering a stable palm oil market, harmonising sustainability standards, promoting value-added production, and representing the interests of member countries in the global palm oil industry.

 

Gunalan said after the Indian government's announcement of an import duty cut, demand for crude palm oil from the country has significantly gone up during June to August. To reduce imports of refined cooking oils, the government on May 30 had cut import duty on crude edible oils to 10% from 20% but retained the import duty on refined cooking oils at 35.75%--thereby increasing the duty differential between the two kinds of oils to 19.25% from 8.25%. In May, the government had also cut the social welfare surcharge to 1.5% from 2.5%, taking the total duty on crude edible oils to 16.5% from 27.5?rlier. 

 

India is a "very, very price-sensitive market". Even if there is a change in price as small as even $10, there is a shift in demand from palm oil to soyoil, Gunalan said. The imports fell due to factors like a switch to cheaper alternatives such as soyoil, which offered better refining margins, and previous concern over potential import tax hikes in India. He also said India's soyoil imports rose during Jan-May as palm oil prices were at a slight premium to soyoil.

 

During Jan–May, India imported 1.6 million tonnes of palm oil, compared with 2.3 million tonnes in the corresponding period a year ago. Exports of soyoil were 1.8 million tonnes during Jan-May, up from 1.3 million tonnes in the year-ago period.

 

However, when the import duty structure in India was revised on May 30, imports of palm oil rose again. The country's palm oil imports during Jun-Sept rose 27% on year to 3.4 million tonnes. In September alone, India imported 824,761 tonnes of palm oil.

 

The country always tries to shift from soybean to palm oil and palm oil to soybean because, "as a business, as a trader, you always opt for the cheapest or the lowest price," he said.

 

 

Gunalan expects India's palm oil imports at 4–5 million tonnes in 2026 and those in 2025 to be lower around 3 million tonnes because of a different tax structure during Jan-May. He also expects India's refined bleached and deodarised palmolein exports lower than last year in 2025 because of duty differential. 

 

Due to the revision in import duty structure in India and increase in the duty differential between palm oil and refined oil, demand for refined bleached and deodarised palm oil from India fell significantly. In September, India imported 824,761 tonnes of crude palm oil, up from 432,510 tonnes last year, while RBD imports were nil compared with 84,279 tonnes imported last year.

 

When asked about the worries around shortage of palm oil supply amid Indonesia's ambitious plan of blending 50% of palm oil with diesel for production of biofuel, Gunalan said there will be no significant jump in Indonesia's palm oil consumption. The country will need only 1–2 million tonnes of extra consumption if it goes for 50% blending of palm oil with diesel. This move will also not lead to lower exports from the major palm oil exporting country, he said.  

 

Global palm oil production in 2025 is likely to be around 82 million tonnes and around 82-83 million tonnes in 2026, higher than global soyoil production, which is expected to increase by 2.2 million tonnes to 70.8 million tonnes in 2026. Hence, despite diversion for biofuel, palm oil's availability will be more than that of soyoil, he said. 

 

Brazil in August had increased its mandatory biodiesel blend from 14% to 15%, which will lead to an uptick in soyoil consumption from 5.5 million tonnes to 6.4 million tonnes. Similarly, US biodiesel policy has significantly increased the demand for soybean oil, leading to it being diverted from other uses, such as food and exports. The expansion of the biodiesel policy by top soybean producers will significantly increase domestic soyoil consumption and may restrict the amount available for export. 

 

Indonesia, on the contrary, has a sufficient supply of palm oil to support B-50 as the initial idea of Indonesia going strong in biodiesel was to absorb as much palm oil as possible, Gunalan said. The Indonesian government had decided to divert palm oil for biodiesel when prices dropped significantly, he added. "And there is no reason for us to anticipate that stock level in Indonesia is going to be tight, that cannot support the B-50 initiative," he said.

 

Talking about palm oil output from the largest producers globally, Gunalan said palm oil production in Indonesia is likely to be above the target of 50 million tonnes in 2025 as the country had produced about 30 million tonnes until July. He also said Malaysia is set to achieve its palm oil output target of 19.5 million tonnes in 2025. 

 

Gunalan sees Malaysia's 2025 year-end stocks of palm oil higher at 2.5 million tonnes as the country's palm oil exports were slightly slower while output was higher. If Malaysia's palm oil exports pick up over the next few months, the end of the year stock level will be normal at 2 million tonnes. In Indonesia, 2025 year-end stocks are unlikely to see any big jump due to strong domestic consumption. 

 

PRICE OUTLOOK

Gunalan sees palm oil prices hovering in the range of $900-$1,100 per tonne in 2025 and may not increase further as there is no major disruption in the supply chain. "This year, my anticipation is that if at all the price goes up, the highest it can hit is about $1,200 (per tonne)," he said. For 2026, if there is no major disruption in the market, prices are seen at $900-$1,200 per tonne.

 

But prices of soyoil are going to increase, may be in the near future, he said. "If the soybean price is even $5 more than palm oil price, then India will start buying palm oil again. That could happen because price is changing every single day. So it can be maybe today or tomorrow or even next week," he said.

 

Prices of palm oil rose to record highs in 2022 as production fell significantly, which is the similar case with all vegetable oils, he said. "And very unlikely that situation is going to repeat anytime soon," he added.

 

He said that it is very unlikely that prices will hit highs of $8,000 like in 2022. The price trend has normalised, but the price trend normally is slightly higher than in pre-COVID time. Pre-COVID prices were below $1,000 at around $800-$900 per tonne.  End

 

US$1 = INR 87.91

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

 

Edited by Akul Nishant Akhoury

 

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