Demand for palm oil from China and India is expected to rise because prices become competitive, said Mpoc

The demand for palm oil from leading global buyers of China and India is expected to increase because vegetable oil is now affordable at sufficient prices compared to its rival, the Malaysian Palm Oil Council (MPOC) said on Tuesday.

Palm oil is now considered “affordable” with a price of 3,900 ringgit ($ 889) per metric ton, MPOC said in a statement, adding that prices are expected to remain supported at that level, supported by recovery of soybean oil prices.

Raw palm oil has ordered premiums for raw soybean oil last year due to tightening supply from supply disorders caused by flooding and when Indonesia lifts the mixture of biodiesel mandate to 40% this year.

However, the supply of vegetable oil has increased, and output is expected to increase in the coming months, which has pressed the Malaysian FCPO1! Palm Oil Contract, sending prices down 12% this year.

MPOC said China was projected to increase the import of palm oil in May and June to refill the inventory, to coincide with the early summer, which usually saw higher palm oil consumption in the country.

“Likewise, India is expected to take advantage of low palm oil prices at this time to replenish its depleted supply, because the price gap between palm oil and soybean oil has narrowed in the domestic market,” he said.

Although the recovery of production was seen in March, MPOC said that the total output of palm oil could drop a little to around 19 million tons in 2025, because the cumulative production for the first quarter remained the lowest in three years and the decline in year-to-year production tended to last until September.

Palm oil stock in Malaysia is expected to continue to increase from April, MPOC said, but noted that the buildup would be moderate, limited by the growth of weak year-to-year-year-to-year production, especially in the Sabah state.

“Palm oil production in Sabah decreased by 10% from January to March 2025, reaching the lowest level in five years. This lack of production will limit the accumulation of inventory and help support the price of palm oil,” he said.

Rough palm oil production from Sabah in 2024 amounted to 4.27 million tons, while production from the Malaysian Peninsula and Sarawak respectively reached 10.89 million tons and 4.17 million tons.
Source: Reuters