July 30, 2025 — Market Analysis

The palm oil market has experienced a shift in recent weeks, with prices coming under pressure due to a combination of increased production and weaker export performance from Malaysia.

Malaysian production shows strong growth

Production data from Malaysia paints a picture of healthy output levels. The Southern Palm Oil Millers Association (SPPOMA) of Malaysia reported a 5.52% increase in production during the first 25 days of July 2025 compared to the same period in June.

However, this production strength has not been matched by export demand. Survey data provided to Vesper indicates that Malaysian palm oil exports during July 1-25 decreased by 9.23% to 1,029,585 metric tons compared to the same period in June.

Indonesian market dynamics

The Indonesian market tells a different story regarding export performance. Indonesian shipments during July 1-25 reached 1,237,099 metric tons, representing only a 1% decline from the levels seen during June 1-25.

Vesper’s analysis of Indonesian market fundamentals reveals interesting patterns. When comparing Vesper’s estimates against actual GAPKI (Indonesian Palm Oil Association) data for May, production reached 4.670 million metric tons versus the actual figure of 4.561 million metric tons. Ending stocks were estimated at 3.038 million metric tons compared to actual levels of 2.916 million metric tons.

For June, Indonesian ending stocks are estimated to have decreased by approximately 20-25% to a range of 2.150-2.300 million metric tons. More precise estimates are expected to be released next week.

Chart 1: Indonesian Palm Oil S&D (mt)


Domestic consumption trends

An interesting development in the Indonesian market has been the increase in domestic consumption. During the January-May period, Indonesian domestic consumption reached 10.200 million metric tons compared to 9.538 million metric tons in the same period last year, representing a net increase of 662,000 metric tons.

However, to produce an additional 2.5 million kiloliters of biodiesel required for the increase from B35 to B40 blend mandates, Indonesia needs to boost domestic consumption by approximately 2 million metric tons this year.

Market analysts at Glenauk Economics anticipate that Indonesia will increase biodiesel production during the second half of 2025 and will be well-positioned to move closer to its consumption targets.

Market outlook

Looking ahead, Vesper’s machine learning model forecasts a slight decrease in the average CPO BMD price during August, followed by a strong recovery in subsequent months.

The analytical team notes that August prices may maintain strength, but agrees with the outlook for price recovery in the coming months. Several factors support this view, including the approach of seasonally higher demand periods from key importing countries India and China.

Additional supportive elements include tighter Indonesian supply conditions observed in June, growing domestic consumption in Indonesia, and a favorable palm oil discount relative to soybean oil prices.

This analysis provides key highlights from Vesper’s comprehensive vegetable oil analysis. Read the full market analysis here: https://app.vespertool.com/market-analysis/2139