Palm oil production poised for modest growth in 2025

The Council of Palm Oil Producing Countries (CPOPC) forecasts an increase in palm oil production this year across Malaysia, Indonesia, Honduras and Papua New Guinea compared to 2024 levels.

In its “Annual Report Market & Outlook 2025”, the council noted that although Indonesia’s production is expected to recover, factors such as stagnating and declining yields, an increasing number of old and unproductive oil palm trees, and low replanting rates are likely to result in marginal growth in palm oil production.

The wet weather conditions experienced in the last quarter of 2024, moving into 2025 due to regional phenomena including monsoon and the persistence of the relatively mild intensity of La Nina, with a transition to El Nino-Southern Oscillation-neutral most likely by March to May 2025, may impact overall production.

“The uncertainties in weather conditions will play an important role in determining the production and yield of palm oil in 2025,” it said.

On the demand side, CPOPC expects strong palm oil demand this year, driven by higher domestic use in Indonesia for biodiesel, stock replenishment in major importers like China and India, and a limited supply of other vegetable oils like sunflower oil.

CPOPC expects palm oil demand to keep growing, driven by key importing countries in Asia, including Asean nations, and increasing demand in Africa, particularly in Egypt, Kenya, and Nigeria.

The council is also optimistic that palm oil will remain a favorable trade commodity in 2025 and continue to be priced at a premium over soybean oil.

Hence, palm oil is anticipated to be traded in the range of US$1,000 per tonne to US$1,200 per tonne in the first quarter of 2025.

However, palm oil prices are expected to trade lower in the second half of 2025 due to the seasonally high-yielding production cycle and harvesting season for rapeseed and sunflower seeds.

Tags: CPOPC, wet weather, Honduras, Indonesia, Production, Malaysia, La Nina, yields, palm oil, forecast, Papua New Guinea