Global demand for palm oil is expected to rise significantly, with China and India emerging as key importers, driven by a shift in price competitiveness. The Malaysian Palm Oil Council (MPOC) forecasts that both countries will increase their purchases over the coming months, capitalizing on more favorable market conditions.
The renewed interest in palm oil comes as the commodity’s prices have become more attractive compared to alternative vegetable oils, particularly soybean oil. At around 3,900 Malaysian ringgit (approximately $889) per metric ton, palm oil has gained an edge following a recovery in soybean oil prices, which has closed the gap between the two major oils. Previously, palm oil had been priced at a premium, influenced by supply constraints and increased demand from Indonesia's biodiesel sector.
For China, the uptick in imports is anticipated to begin in May and June, coinciding with rising summer consumption patterns and the need to replenish dwindling inventories. In India, traders and refiners are also expected to ramp up purchases in response to the favorable pricing, aiming to restore stockpiles that have dropped to lower levels in recent months.
Despite the growing demand, concerns linger over Malaysia’s production capabilities. While March saw a slight recovery, the country’s total palm oil production is expected to drop slightly in 2025, reaching an estimated 19 million tons. The first quarter of the year already registered the lowest production figures in three years, and industry experts predict a slow output trend until at least September.
Stock levels in Malaysia may start to rise from April onward, but the increase is expected to be modest due to sluggish production. This scenario presents a delicate balance between demand and supply, which could impact pricing strategies and export volumes in the near term.
The projected surge in demand from China and India demonstrates palm oil’s resilience and strategic importance in the global vegetable oil market. Its renewed price competitiveness has restored interest among major buyers, potentially stabilizing trade volumes amid broader economic uncertainties. However, Malaysia’s output constraints may limit the pace at which global stocks are rebuilt. As palm oil plays a vital role in the food, cosmetic, and energy sectors, all eyes will be on how producers manage supply challenges to meet rising global demand without causing volatility in pricing.