Palm oil prices projected to hit $1,200 on global price rally

Global palm oil prices have been projected to hit $1,200 per metric ton in 2025 from $900, according to a new report by Afrinvest West Africa.

This 33 percent surge is driven by surging crude palm oil (CPO) prices in Indonesia and Malaysia — the two largest global palm oil producers — and strong operational fundamentals.

The report attributes this to several factors, including expectations of firmer crude oil prices, which boost biofuel appeal; optimism over softening US-China trade tensions, which may support edible oil demand; and reduced supply due to the biofuel mandate programmes implemented by Indonesia and Malaysia.

“Despite the 16.3 percent decline to $900.0 per MT in the first five months of 2025, we foresee CPO’s price to grow, hovering around $1,200 per MT by year-end,” Afrinvest noted.

Global CPO prices surged 36.2 percent year-to-year to $1,086/MT in 2024—the highest level since July 2022—due to Indonesia’s B35 mandate, El Nino-driven supply disruptions, and heightened demand as buyers switched from sunflower oil amid geopolitical tensions.

Unrest in Russia and Ukraine further disrupted over 70 percent of global sunflower oil exports last year, prompting consumers to shift demand toward CPO and creating additional price pressure across the edible oil market.

However, the price rally projection by Afrinvest creates an opportunity gap for Nigeria.

Alphonsus Inyang, president of the National Palm Produce Association in Nigeria, warns that Africa’s most populous nation’s reliance on Malaysia and Indonesia for its palm oil needs will be risky in the long term.

Stakeholders in the value chain believe Nigeria can leverage its position as the fifth largest producer of palm oil to tap into the current price rally if new palm trees are planted and better policies are made to guide the sector from illegal imports.

With an annual average palm oil production of 1.5 million MT and a growing demand by both industries and consumers, Nigeria has a supply gap of about 450,000 MT, which it fills through imports.

In 2024, CPO exports grew by 1.7 percent to 44.2 million MT, led by Indonesia, which contributed 51.1 percent, while Malaysia contributed 34.9 percent.

The report reveals that export growth was supported by firm global demand, although logistical bottlenecks, shipping delays, and restrictive trade policies from top exporters like Indonesia posed downside risks to global trade volumes.

This growth marked a recovery from previous years of climate-related disruptions and reflected increased investment in plantation productivity, including improved seed varieties, better fertilisation practices, and wider adoption of mechanised harvesting techniques in key producing regions.

“This shift presents a strategic opportunity for Nigeria to revive the ‘Red Gold’ by transforming its underperforming oil palm sector into a regional hub and closing a 450,000 MT annual supply gap,” Afrinvest noted.

Tags: Indonesia, prices, Crude palm oil, Production, Malaysia, palm oil, Nigeria, biofuel, demand, sunflower oil, exports