Market overview

Global palm oil trading volumes remain subdued as pricing continues to present challenges for market participants. Current price levels are limiting demand in key markets, with a potential shift toward more competitively priced alternatives. This trend is affecting export patterns across major producing regions in Southeast Asia.

Export volumes from major origins

Intertek reported to Vesper that Malaysian palm oil exports between March 1 and 15 amounted to 420,677 metric tons, representing a 7.5% decrease compared to the same period last month.

Meanwhile, Vesper’s partner reported that Indonesian palm oil exports totalled 679,100 metric tons during the same period (March 1–15), which is consistent with the previous month’s figures. It’s worth noting that Indonesian exports are now slowing after an exceptionally strong February, which was stimulated by government-implemented export tax cuts. Based on vessel lineup data, Vesper estimates that GAPKI could report Indonesia’s February exports at approximately 2.7 million metric tons (including oleochemicals and biodiesel).

Indian market trends

India, a key palm oil importing nation, showed slightly improved import volumes in February compared to January, reaching 373,549 metric tons. However, this remains the lowest February figure recorded in the past five years.

RK Singhal indicated that elevated palm oil prices are significantly dampening Indian demand. He suggested that even a modest $50/metric ton reduction in palm oil prices could potentially increase Indian demand by 20%. Furthermore, he noted that India is likely to increase its purchasing activity once production increases at origin countries and prices subsequently decrease.

Price forecasts and market outlook

Vesper’s proprietary machine learning model projects a declining trend for Bursa Malaysia Derivatives (BMD) crude palm oil (CPO) prices, forecasting levels of approximately $1,000/metric ton from April onwards. Vesper’s analytical team concurs with this projection.

Several factors are influencing this outlook:

  • A tight supply-and-demand balance for Malaysia and Indonesia could provide a price floor
  • Favorable soybean supply is creating competitive pressure
  • A shift in demand from palm oil to more competitively priced soybean oil in key markets
  • The seasonal ramp-up in CPO production is expected to exert downward pressure on prices in coming months

Conclusion

Palm oil prices continue to be viewed as uncompetitive compared to alternative vegetable oils, particularly soybean oil. The market outlook remains stable to slightly bearish, with structural factors suggesting potential price corrections in the coming months. Market participants should monitor production increases at origin countries and potential policy changes that could affect export volumes from major producers.

For more detailed analysis on vegetable oil markets and cross-commodity impacts, visit Vesper’s commodity market analyses section: https://app.vespertool.com/market-analysis?commodity=vegetable-oil