Global palm oil prices advanced this week, driven by a combination of tightening supplies in Malaysia, bullish market sentiment from the Indonesian Palm Oil Conference (IPOC), and support from higher soybean oil prices on the Chicago Board of Trade (CBOT).

The Bursa Malaysia Derivatives (BMD) spot price for palm oil increased to $1,197 per metric ton, up from $1,140 recorded in the same period last week. Reflecting a similar trend, the Vesper Price Index for RSPO Segregated Crude Palm Oil (CIF Rotterdam, January delivery) rose to $1,432 per metric ton, up from last week’s level of $1,370.

The MPOB reported that Malaysian production in October declined by 1.35% to 1.797 mmt,
exports rose by 11% to 1.732 mmt, and ending stocks fell by 6.32% to 1.885 mmt. Market expectations had anticipated a more modest performance, with forecasts suggesting a 6% export increase and a 4-5% decline in stocks. The report from MPOB, therefore, offered more bullish indications than anticipated, adding further support to market prices.

Meanwhile, Indonesia, another major palm oil producer, is experiencing its own shifts. Vesper estimates suggest that Indonesian production increased to 4.580 million metric tons in September and rose again in October to 4.780 million metric tons. Ending stocks in Indonesia are estimated to have climbed to 2.8 million metric tons by the close of September, with October’s stock levels likely around 3.90 million metric tons, see figure below.

Figure 1: Indonesian Palm Oil Production (mt)



What is the palm oil price forecast for 2025?

Vesper’s machine learning model forecasts an upward trend for BMD palm oil through Jan, with a decline anticipated afterwards, see figure below.

Figure 1: BMD Palm Oil Price Forecast (MYR/mt)

Several speakers at IPOC last week expressed their opinion that palm oil prices are prone to correction in the short term due to wide POBO and POGO spreads due to the fact that most bullish factors have been factored in and questions around the speed of B40 implementation.

In the long term, some speakers said it could be bullish (after the correction in 2024). Despite the expectation of a recovery in Indonesian production in 2025, exports from this country are expected to drop by around 3%, according to GAPKI, due to higher domestic consumption, especially by the biodiesel sector.

However, some agencies, including OilWorld, say there is a question of how quickly the transition from B35 to B40 can be done. Among other supporting factors, festive celebrations (Chinese New Year, Ramadan, Eid-ul-Fitr) giving support in Q1 and a period of lower production lasting from November to March.

The minimum average price for BMD heard for 2025 is MYR 4000/mt, and the maximum is MYR 5000/mt.

For more insights into palm oil market price forecasts, visit Vesper for free.