Analysts forecast CPO prices to decline after the first quarter of 2025

Analysts at Malaysia’s Hong Leong Investment Bank Bhd (HLIB) say high crude palm oil (CPO) prices are unlikely to persist beyond the first quarter of 2025 as the price premium over other competing vegetable oils is unsustainable in the long term.

According to analysts, high palm oil prices will lead to demand rationing and force major importing countries to switch to cheaper alternative vegetable oils, thereby narrowing the price gap, especially when palm oil production starts to show signs of improvement, Business Time noted.

As a reminder, the CPO price has risen more than 15% since October, resulting in an average price of 4,230 ringgit $940 per ton in 2024, compared to 3,832 ringgit or $832 per ton in 2023.

However, HLIB maintained its CPO price assumptions for 2025/26 at 4,000 ringgit or $889 per tonne, believing that the CPO price will remain high in the near term, supported by weak production.

Sharing this view, Maybank Investment Bank Bhd (Maybank IB) said 2025 will be another volatile year, influenced by geopolitical risks and changing government policies.

Both firms believe that without higher crude oil prices, the spot CPO price will be at risk of a correction after Ramadan. Early Chinese New Year, which centers on the first new moon of the new year and falls between Jan. 21 and Feb. 21 this year, and early Ramadan (Feb. 28-March 29) will coincide with a typical cycle of low oil production in the first quarter.

“After the first quarter of 2025, we expect the CPO price to decline and fluctuate in a wider range of 3,500 to 4,500 Malaysian ringgit per tonne until the end of 2025. CPO’s unusual price leadership compared to other major vegetable oils should end when the industry begins a seasonal recovery in production in the second half of the year,” the report said.

Tags: prices, palm oil