Crude palm oil prices correct earlier than expected

With crude palm oil (CPO) prices correcting earlier than expected, stock levels are likely to rise over the next few months, The Star notes.

Taking this into account, research firm UOB Kay Hian (UOBKH) has revised down its average CPO price assumption for this year to RM4,500 per tonne to RM4,200 per tonne.

CPO prices peaked early in Q1 2025, buoyed by Indonesia’s B40 biodiesel mandate, and have subsequently corrected as palm oil production enters peak season and the supply-demand balance weakens. On the eve, crude palm oil prices returned to a fair spread with its main competitor, soybean oil, ending a five-month price inversion since November.

Analysts say the new CPO price assumption partly explains the ongoing correction to RM4,100 levels, which has happened slightly earlier than previously estimated.

Palm oil prices are forecast to remain soft until the third quarter of 2025 as palm oil inventories are rapidly increasing, with Malaysia and Indonesia potentially raising production significantly this season. Palm oil export volumes are expected to pick up from the second quarter, allowing the tropical product to regain some of its share in key markets including China and India.

According to research firm UOBKH Research, the lowered CPO price forecast for 2025 has cut the profits of companies in the CPO industry by about 9%.

Tags: prices, palm oil