Average palm oil price forecast to be RM3,900 in 2025: BMI

22-Nov-2024 09:36 AM

Average palm oil price forecast to be RM3,900 in 2025: BMI
The palm oil market is facing a mixed outlook with prices expected to drop slightly in 2025. According to BMI’s forecast, the average palm oil price for 2025 will be RM3,900 per tonne, a decline from the estimated RM4,050 per tonne in 2024. Several factors are contributing to this anticipated price reduction:

Abundant Supply: Increased production of palm oil, along with a rise in supply from other vegetable oils, is putting downward pressure on palm oil prices. This surplus is likely to continue affecting the market.

Competition from Other Oils: The rising availability of alternative oils, especially soybean oil, is narrowing the price gap between palm oil and its competitors, which is further pressuring palm oil's market share and pricing.

Uncertainty in Demand: Key consuming markets, particularly in Asia, are uncertain about their palm oil import demand. This is partly driven by geopolitical factors and changing consumption patterns in countries like India, which has also raised import duties on edible oils.

India's Import Duty Increase: India's move to hike import duties on crude and refined edible oils has reduced demand for palm oil, particularly impacting Malaysia, a major palm oil exporter to India.

Malaysia’s Production Decline: Malaysia's palm oil production is expected to fall by 1% in the 2024-2025 period, from 19.8 million tonnes to 19.6 million tonnes, which could limit supply but not enough to prevent a price decline due to broader market dynamics.

Overall, while supply constraints in Malaysia might offer some support to prices, the broader market conditions—particularly the competition from other oils and demand uncertainty—are expected to outweigh these factors, leading to a modest price decline in 2025.