BMD crude palm oil prices rose to $1,176/mt this week, up from $1,123/mt the previous week, supported by a combination of supply-side developments, biodiesel speculation and renewed strength in Brent crude oil.

B50 implementation and export restrictions in focus

Speculation around Indonesia’s B50 biodiesel mandate is one of the key drivers of the current price rally. With Brent crude oil closing above $100/barrel, B50 testing and implementation may come sooner than previously expected. Indonesian President Prabowo has also hinted at possible export restrictions or additional taxes on palm oil to support the domestic market, adding a further layer of uncertainty to the supply outlook.

Malaysian shipments jump, production slips

Malaysian palm oil shipments during March 1-15 reached 926,602 mt, up 43.51% compared with 645,656 mt during the same period in February. The increase reflects importers in Asia securing nearby palm oil cargoes, partly due to shorter voyage times and higher logistical risks associated with Latin American soy oil and Black Sea sunflower oil.

On the production side, SPPOMA data for March 1-15 indicate a 5.28% decrease in production in the Malaysian region. Indonesian shipments were 51% lower in the first two weeks of March compared with the same period in February, according to one surveyor.

GAPKI data for December were described as very bullish by market participants, with production at 4.207 million mt, exports at 2.9 million mt (up 67.41%), and stocks 25% lower at 2.068 million mt.

Freight rates adding to procurement costs

Vegetable oil freight rates have risen sharply since the onset of the Middle East conflict, adding to landed costs for buyers. The freight rate for a 40,000 mt vegetable oil tanker from Malaysia and Indonesia to Rotterdam has increased by $5/mt to $85/mt. Vessel availability is tight.

Outlook: sideways to slightly bearish in Q2, recovery expected later in the year

For Q2, production typically recovers seasonally, and relatively high Malaysian stock levels could put downward pressure on prices. However, ongoing B50 speculation, potential production risks and a possible continuation of the Middle East conflict could provide support. The overall Q2 outlook is sideways to slightly bearish.

For Q3, seasonal factors are expected to support a price recovery. Heading into H2 2026, some market participants expect firmer prices due to the potential impact of land seizures in Indonesia on production and renewed B50 speculation ahead of 2027.

For the full vegetable oil market analysis, visit: https://app.vespertool.com/market-analysis/2802