Reduced palm oil exports from Malaysia increase pressure on vegetable oil prices

After soybean oil prices fell by 10-12% to $920-930/t during the month, palm oil quotes remained at $1,020-1,030/t for some time, but the pressure on them increased due to a decrease in export rates and an increase in the base price of SRO in Malaysia in March.

According to estimates by surveyor Intertek Testing Services (ITS), during March 1-15, Malaysia reduced palm oil exports by 10.6% compared to the same period in February, from 422.4 to 381.8 thousand tons due to reduced demand from importers.

The Malaysian authorities increased the SRO base price for April by 3.6% to 4,547.79 ringgit/t, but the export duty rate remained at 10%.

Against this backdrop, April palm oil futures on the Bursa Malaysia exchange fell 4.8% to 4,366 ringgit/t or $988/t on Monday (-3% for the week). Yesterday was a holiday in Malaysia, so today’s drop in quotes will increase pressure on prices of sunflower oil, which remains the most expensive on the market.

According to Trading Economics, the average price of sunflower oil delivered to customers fell by 1.6% to $1,338/t (-3% in three weeks, 0.9% in the month) due to reduced demand.

Indonesia’s Palm Oil Fund Management Agency is proposing to raise the export duty on palm oil from 3-7.5% to 4.5-10% of the base price, which will allow the authorities to finance a mandatory increase in the share of palm oil in biofuels from 40% to 50%, Reuters reports.

The move will reduce Indonesian palm oil exports and support prices. Indonesia raised its SRO duty from 7.5% to 10% at the end of 2024, recently increased the mandatory palm oil content in biofuels from 35% to 40%, and plans to raise it to 50% in 2026, followed by a 3% oil content in aviation kerosene. In 2025, the Palm Oil Fund Management Agency plans to allocate 35.47 trillion rupiah ($2.15 billion) in subsidies for biodiesel producers.

Every year, Indonesia exports an average of 30 million tons of palm oil, and Malaysia about 15 million tons. The main importers of this product are India (10 million tons), China (almost 6 million tons), and EU countries (5 million tons).

Tags: prices, palm oil