CPO discount vs soyabean oil expected to continue until third quarter and may spur Indian demand, analysts say

CPO’s five-month premium over its rival oil ended in April and its competitive price had led to a slight increase in Indian imports, the 21 April report said.

Chinese CPO demand could also increase due to the US-China tariff war, which could impact US soyabean shipments to China, the analysts added.

With output expected to remain elevated until at least October, CPO’s discount to soyabean oil was likely to persist through the third quarter of 2025, according to CIMB Securities head of research Ivy Ng Lee Fang.

“As long as supply continues to rise, we expect palm oil to stay competitively priced against other edible oils,” Ng told The Edge.

The discount could hold until around September, when soyabean oil production typically picked up due to seasonal patterns, a senior trader at trading firm IcebergX was quoted as saying.

With soyabean oil used in biofuel production in the USA, the industry was waiting for clarity on the country’s biofuels policy, which could influence supply, The Edge wrote.

In addition, the escalating USA-China trade war also supported soyabean prices, prompting China to turn to Brazil for the commodity, Fastmarkets Palm Oil Analytics managing editor Dr Sathia Varqa was quoted as saying.

CPO prices could range from RM4,400-4,600 (US$1,006-1,051)/tonne in the fourth quarter to average RM4,300 (US$983)/tonne for the year, a trader at IcebergX said.

Lower CPO prices have led to increased demand from the world’s largest importer India, according to the report.

“From late March to early April, we’ve seen some buying interest from India. India is more sensitive in terms of pricing. If this pricing trend continues, we can expect even stronger demand from that market,” CGS International analyst Jacqueline Yow was quoted as saying.

India imported 3.03M tonnes of Malaysian palm oil in 2024, representing 17.9% of Malaysia’s total exports, according to Malaysian Palm Oil Board (MPOB) data.

CPO typically trades at a discount to soyabean oil throughout the year, except for a short period in March or April, according to the report.

However, from last December until March, the commodity had a prolonged stint trading at a premium against soyabean oil, which at one point exceeded US$100 (RM441)/tonne, The Edge wrote.

Prices were supported by supply concerns in leading palm oil producers Malaysia and Indonesia, alongside Indonesia’s implementation of the B40 biodiesel mandate, which required a 40% palm oil blend in diesel, the report said.

That trend had reversed in the weeks prior to the report, with soyabean oil trading at a premium of about US$36 (RM157)/tonne to palm oil, The Edge wrote.

Tags: demand, discount, soyabean oil, China, prices, Crude palm oil, India, biodiesel, imports, output, CPO