Original content
India’s edible oil imports dropped to a four-year low in Feb-25, declining 12% month-on-month (MoM) to 884 thousand metric tons (mt). The decline was due to high global prices and reduced demand. Meanwhile, palm oil imports rebounded by 36% MoM to 374 thousand mt after hitting a 13-year low in Jan-25, as buyers took advantage of improved price competitiveness.
Indonesia’s palm oil exports are projected to decline in 2025 despite higher production due to increased domestic biodiesel consumption. The shift from B35 to B40 biodiesel is expected to raise palm oil demand for fuel from 11.44 million metric tons (mmt) in 2024 to 13.6 mmt in 2025, reducing exportable supplies. As a result, exports will drop 7.3% year-on-year (YoY) to 27.35 mmt, even though Crude Palm Oil (CPO) production will rise from 48.16 to 50 mmt. This tightening supply for exports has also increased palm oil prices, making it more expensive than alternatives like soybean oil.
Malaysia’s palm oil plantations in Johor and Perak experienced infestations of leaf-eating pests, particularly bagworms, following recent floods that disrupted production. These two states account for 1.01 million hectares (ha) of Malaysia’s total 5.61 million ha of oil palm plantations. The infestations pose an increasing threat, with new outbreaks reported in Perak. The Malaysian Palm Oil Board (MPOB) is implementing control measures, including spraying biopesticides and planting beneficial crops to combat the issue. The government has requested USD 1.05 million to strengthen pest control efforts. Malaysia’s palm oil output recently fell to a six-month low in Mar-25 due to flood-related disruptions.
Around 70 to 80% of Malaysia’s palm oil smallholders have already complied with the European Union Deforestation Regulation (EUDR), according to the Plantation and Commodities Minister. The government aims to support the remaining smallholders in meeting compliance before the EUDR deadline on Dec 30, 2025. While large plantations are expected to face minimal challenges due to existing international certifications, small and medium-sized enterprises (SMEs) have until June 30, 2026, to comply. Despite this, over 45 countries have called for a delay in the EUDR implementation.
Indonesian palm oil prices declined 1.90% week-on-week (WoW) to USD 1.90 per kilogram (kg) in W10 due to higher domestic supply from increased CPO production, which rose to 4.16 mmt in Feb-25 from 3.92 mmt in Jan-25. Moreover, weaker export demand amid increased biodiesel allocation under the B40 mandate reduced available supply for international markets, pressuring prices downward. However, prices remained 74.16% higher YoY due to lower overall production, strong domestic biodiesel demand, and rising export taxes. This sharp increase has made palm oil more expensive than other vegetable oils, turning it into a premium product and challenging market competitiveness. High prices could push consumers toward alternative oils, as seen in India, where reversing the shift away from palm oil requires significant effort.
Malaysian palm oil prices declined 1.85% WoW and 0.93% MoM to USD 1.06/kg in W10, driven by concerns over pest infestations, particularly bagworms, in key oil palm-producing states like Johor and Perak. The MPOB reported that these infestations and ongoing recovery efforts from recent floods have disrupted production and raised concerns over future supply.
Thailand's palm oil prices fell slightly by 0.89% WoW to USD 1.11/kg in W10, down from USD 1.12/kg in W9. The price decline was mainly due to increased CPO production, with Thailand’s palm oil output rising to approximately 2.9 mmt in early 2025, up from 2.75 mmt in the same period in 2024. Furthermore, weaker export demand from key buyers such as India and China added downward price pressure. The Thai government's decision to maintain high biodiesel stockpiles also limited domestic palm oil consumption growth, further weighing on market prices.
With Indonesia’s palm oil exports expected to decline by 7.3% YoY due to increased domestic biodiesel consumption, exporters must explore new markets. Due to rising palm oil costs, traditional buyers like India and China are shifting toward alternative oils. Expanding trade agreements with African nations, Latin America, and the Middle East can help mitigate the impact of reduced exports. Moreover, securing sustainability certifications like Roundtable on Sustainable Palm Oil (RSPO) or Indonesian Sustainable Palm Oil (ISPO) can improve access to high-value markets such as the EU, which enforces strict environmental regulations under the EUDR. Strengthening diplomatic ties and easing trade barriers through government-led initiatives can further enhance Indonesia’s palm oil export opportunities.
The severe bagworm infestation in Johor and Perak threatens Malaysia’s palm oil yield, especially following recent flood disruptions. Left unchecked, these pests can cause significant defoliation, reducing photosynthesis and lowering oil extraction rates. To combat this, plantation operators should adopt Integrated Pest Management (IPM) strategies, combining biological control (introducing predatory insects like Sycanus) with chemical treatments. Remote sensing technology and AI-driven early warning systems can also help detect outbreaks before they escalate. Furthermore, replanting affected areas with pest-resistant palm varieties and improving soil health through sustainable fertilization can enhance long-term production stability, minimizing future disruptions.
Palm oil’s rising cost, now more expensive than soybean and sunflower oils, has made it less attractive to major importers like India. To counter this, palm oil producers in Indonesia, Malaysia, and Thailand should streamline supply chains and reduce operational costs. This includes optimizing storage and transportation to minimize spoilage and ensuring more efficient logistics, such as direct shipping routes to key buyers. Furthermore, exporters can introduce flexible pricing models, offering competitive bulk purchase discounts to retain major customers. Encouraging government incentives, such as temporary reductions in export levies or tax benefits for long-term contracts, could further improve palm oil’s price competitiveness in global markets.
Sources: Tridge, Hellenic Shipping News, NoticiasAgricolas, UkrAgroConsult
Read more relevant content
Recommended suppliers for you
What to read next
