CPO Prices Predicted to Stay High in First Half of 2025

Palm Oil Magazine
CPO Prices Predicted to Stay High in First Half of 2025. Photo by: Sawit Fest 2021 / Wahyu Karbadi

PALMOILMAGAZINE, KUALA LUMPUR – Crude palm oil (CPO) prices are expected to remain elevated during the first half of 2025, ranging between RM4,400 and RM4,800 per ton. However, prices are predicted to moderate in the second half of 2025 (2H 2025) to RM4,000–RM4,400 per ton, coinciding with the peak production season.

According to RHB Investment Bank Bhd (RHB IB), this outlook is supported by several factors, including low production and inventory levels in Indonesia during 2024, Indonesia’s increased biodiesel mandate for 2025, and tighter supplies of sunflower and rapeseed oils next year.

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“These factors are expected to create a more pronounced global oils and fats deficit in 2025, driving up vegetable oil prices. The stock-to-use ratio for 17 types of oils and fats is projected to hit a 15-year low of 12.6%,” stated RHB IB in its report, as cited by Palmoilmagazine.com from Bernama on Wednesday, January 14, 2025.

Also Read: CPO Prices at KPBN Inacom Drop 0.93% on Friday (Jan 17), Weekly Prices Fall 0.52%

However, several downside risks remain, including geopolitical tensions, significant fluctuations in crude oil prices, weather anomalies, worsening labor conditions in Malaysia, and potential revisions to Indonesia’s tax and trade policies.

RHB IB maintains an “overweight” recommendation on the plantation sector, expecting stable and higher CPO prices in 2025 to bolster sector performance.

Kenanga Investment Bank Bhd (Kenanga IB) and CIMB Securities Sdn Bhd share a similar outlook. Kenanga IB highlights that tight vegetable oil supplies will sustain high CPO prices.

“The FAO Vegetable Oil Price Index rose 33% year-on-year in 2024, despite slight month-on-month declines,” Kenanga IB noted. Among the four major vegetable oils—palm, soybean, rapeseed, and sunflower—palm oil continues to lead in pricing.

CIMB Securities projects palm oil stock levels to rise by 1.0% month-on-month (m-o-m) to 1.73 million tons in January 2025 due to weak exports and domestic consumption.

On the production side, CPO output is expected to decline by 8.0% m-o-m to 1.37 million tons due to seasonal factors, while palm oil exports are predicted to drop by 16% m-o-m to 1.13 million tons. The significant price gap between CPO and soybean or rapeseed oil has prompted consumers to opt for cheaper alternatives.

Meanwhile, Indonesia’s adoption of the B40 biodiesel mandate, planned for late Q1 2025, is anticipated to boost domestic palm oil demand.

Considering these factors, CIMB Securities maintains its 2025 average CPO price forecast at RM4,200 per ton. (P2)

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