Palm oil demand from China, India may rise in next two months, support prices — MPOC

Demand for palm oil from top buyers China and India may rise from restocking ahead of summer and ongoing discount against soybean oil, the Malaysian Palm Oil Council (MPOC) said on Tuesday.

China is projected to increase its palm oil imports in May and June to refill inventory, coinciding with the onset of the summer season that typically sees higher consumption, the MPOC said in a statement. India will capitalise on the current prices to similarly replenish depleted stockpile, the council said.

“In coming weeks, palm oil prices are expected to remain supported” at RM3,900 per tonne, which is a “reasonably priced” level, the MPOC said. “This stability is underpinned by the recovery in soybean oil prices, which enhances palm oil’s price competitiveness.”

India imported some 3.03 million tonnes of palm oil from Malaysia, or nearly 18% of Malaysia’s total exports of the edible oil in 2024, followed by China that bought 1.39 million tonnes, data from the Malaysian Palm Oil Board (MPOB) showed.

The benchmark palm oil futures for July delivery is currently trading at RM3,915 on Bursa Malaysia Derivatives. Soybean oil on the Chicago Board of Trade, meanwhile, has remained above 42 US cents per pound, or around US$920 per tonne.

The recent removal of tax credits for both canola oil and imported used cooking oil from the US biodiesel supply chain will result in feedstock shortfall that is expected to be addressed by higher demand for tallow and soybean oil, the MPOC noted.

“This suggests that global soybean oil prices may have bottomed out and are poised for recovery, once US biofuel policy becomes clearer in the months to come,” it added.

Although soybean oil is currently trading at a rare premium to palm oil, the MPOC does not anticipate a “strong rally” amid escalating trade tensions and soft crude oil prices.

Stockpile of palm oil in Malaysia could continue rising from April onwards, the council flagged. However, the build-up will be moderate, capped by weak year-on-year production growth, particularly in Sabah, the MPOC noted.

Palm oil production in Sabah declined by 10% from January to March 2025, reaching its lowest level in five years, which will limit inventory accumulation, it said.

Overall, palm oil production is expected to fall to around 19 million tonnes this year, compared with 19.3 million tonnes in 2024, it added.