Crude palm oil prices decline as Indian imports hit a 14-year low

The spot price for crude palm oil (CPO) on the Bursa Malaysia Derivatives Exchange (BMD) declined to $1,071/mt, down from $1,079/mt last week. However, prices briefly surged to $1,093/mt on February 12, driven by supply tightness before trending downward.

One of the major contributing factors to this price drop was India’s palm oil imports plummeting by 45% in January, reaching just 275,000 mt—the lowest since 2011. The decline is attributed to negative processing margins, making palm oil imports less attractive for Indian refiners.
Mixed Export Trends in Malaysia and Indonesia

Exports from Malaysia in the first half of February stood at 455,000 mt, marking a 20% decline compared to the same period in January, according to Intertek. This slowdown has added downward pressure on palm oil prices.

Conversely, Indonesia’s palm oil exports surged by 26% in the same timeframe, reaching 683,330 mt. The increased demand is likely linked to higher consumption ahead of Ramadan, which often drives up palm oil imports across key markets, particularly in the Middle East and South Asia.

Macroeconomic factors weigh on vegetable oil markets

Beyond palm oil, the soy complex remained largely rangebound, with CBOT soybean oil closing at 46.52 cents/lb. While NOPA soy oil stocks tightened, lower fossil fuel prices capped further price gains. Additionally, Argentinian crude soybean oil prices rose to $1,116/mt, reflecting concerns over the Argentinian crop outlook.

In the rapeseed oil market, MATIF rapeseed prices climbed to EUR 529/mt, driven by lower French acreage and geopolitical tensions surrounding Russia-Ukraine peace talks. Meanwhile, FOB Dutchmill crude rapeseed oil prices increased to EUR 1,093/mt, maintaining bullish sentiment.

The sunflower oil sector remained firm, with Ukraine’s crushing activity slowing and Russian sunflower seed stocks expected to hit multi-month lows. March crude sunflower oil prices rose to $1,220/mt, reflecting tight supplies.

Outlook: what to expect for palm oil prices?

According to Vesper’s machine learning model, BMD crude palm oil prices are expected to stay above $1,000/mt in the near term but could face pressure from increasing production in April onward. Additionally, the Indonesian government’s push for full implementation of the B40 biodiesel mandate in March could influence demand-side fundamentals.

Looking ahead, analysts believe that tight supply conditions in Malaysia and Indonesia could support prices in Q1, but long-term trends indicate that palm oil must remain competitive against growing soy and rapeseed oil output in 2025.

For a comprehensive analysis and more detailed insights, access the full report here: https://app.vespertool.com/market-analysis/1725