Palm oil output rises in April, price recovery expected by mid-year

Malaysian palm oil production rose sharply by 298,000 tonnes in April compared to March, rebounding from harvesting delays in early March caused by the monsoon season.

According to the Malaysian Palm Oil Council (MPOC), production is expected to see moderate gains through September, mainly due to the high base effect.

The output surge also pushed palm oil inventories up by 303,000 tonnes, reaching a six-month high—largely the result of softer export activity in March and April.

Sub-Saharan Africa led export growth with a 24 per cent rise in the first four months of 2025, followed by an 8 per cent increase in the ASEAN region. However, exports to other regions declined.

Looking ahead, MPOC said that palm oil prices are expected to remain in the range of RM3,750 to RM4,050 in May before gradually recovering.

The council highlighted that both the vegetable oil and energy markets have been highly volatile over the past two months, largely influenced by intensifying trade tensions between the U.S. and China and OPEC’s decision to ramp up crude oil production from June.

It said that these developments have weighed heavily on market sentiment, dragging palm oil prices down by 18 per cent since April. In contrast, soybean oil prices rose by 7 per cent, while crude oil tumbled by 20 per cent.

In response to the shifting price landscape, India reduced its effective import duty on crude palm oil in May, making it US$15 cheaper than soybean oil. This adjustment is expected to enhance palm oil’s price advantage and spur higher import volumes, potentially at the expense of soybean oil.

China has also seen improved palm oil competitiveness. In December 2024, the landed price of palm olein in China was US$260 higher than soybean oil. By May 16, 2025, the price gap had narrowed dramatically to just US$1.

MPOC anticipates this price parity will drive a recovery in Chinese palm oil imports, particularly during the peak summer demand in June. Nonetheless, China’s vegetable oil stockpile remains comfortable at 1.76 million tonnes.

Meanwhile, the global biodiesel sector continues to struggle with weak margins, limiting blending to the minimum levels mandated in most regions.

US biodiesel production dropped 24 per cent in the first two months of 2025, falling to 2 million tonnes from 2.7 million tonnes a year earlier. Feedstock consumption also saw steep declines: canola oil by 57 per cent, soybean oil by 33 per cent, and used cooking oil (UCO) by 31 per cent.

Global biodiesel production is projected to decline by 1.7 million tonnes in 2025, with the US accounting for a reduction of 1 million tonnes.

In contrast, biodiesel consumption in Indonesia remained stable at 1.9 million tonnes in the first two months of 2025, a modest 2 per cent increase from the same period in 2024.

Biodiesel usage in March and April was also on track to meet the country’s annual target of 13.7 million tonnes.

Overall, the global vegetable oil market remains subdued, lacking strong bullish drivers. Weak energy prices continue to weigh on biodiesel margins globally.

From June to September, global vegetable oil import demand is expected to shift in favour of palm oil, limiting further downside pressure on prices.

Tags: inventories, China, prices, Production, Malaysia, biodiesel, palm oil