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Trade4go
Mar 28th, 2025
Original content
Colombia’s palm oil sector is entering a recovery phase in 2025 after a challenging 2024 marked by El Niño and declining productivity. National production fell to 1.72 million metric tons (mmt) in 2024 but is expected to rebound as weather conditions stabilize. While regional disparities persist, early signs of growth are emerging, with a 5.3% year-on-year (YoY) increase in Jan-25 output. Despite recent declines, prices remain strong, supported by rising oil prices and biodiesel demand, which absorbs nearly half of national production. Ongoing expansion of cultivated areas suggests long-term growth potential, positioning palm oil as a key driver of Colombia’s agro-industrial sector.
Indonesia will increase its palm oil export levy between 4.5% and 10% of the crude palm oil reference price, up from the previous range of 3% to 7.5%. This adjustment is part of efforts to fund a mandated rise in palm oil use in biodiesel, with the biodiesel blend increasing from 35% to 40% in 2023. The Indonesian government is also considering raising the biodiesel blend to 50% by 2026 and introducing a 3% palm oil blend for jet fuel next year to reduce fuel imports. The new export levy rates will be implemented three days after the regulation is finalized, and the Plantation Fund Agency (BPDPKS) is expected to distribute USD 2.15 billion (IDR 35.47 trillion) for the biodiesel subsidy this year.
Indonesia's crude and refined palm oil exports rose by 62.2% month-on-month (MoM) in Feb-25, reaching 2.06 mmt, the highest level in four months, according to the Central Statistics Agency (BPS). This surge was driven by Indonesia's decision to lower export taxes, making its palm oil more competitively priced than Malaysia's. As a result, buyers shifted to Indonesia, contributing to a 16.27% decline in Malaysia's exports, which hit a four-year low. The increased exports from Indonesia are expected to reduce palm oil stocks and support prices, which remain higher than soybean oil prices. Indonesia's palm oil exports, despite a premium over soybean
Malaysia's palm oil exports from March 1 to March 15 totaled 381,790 metric tons (mt), a 10% MoM decrease from Feb-25's 422,425 mt, attributed to lower demand from key markets. Exports to India rose by 13% to 64,320 mt, driven by higher crude palm oil shipments. However, exports to Pakistan and Sri Lanka dropped to zero, while shipments to the Middle East fell by 58% MoM, reflecting a post-Ramadan decline. Exports to China were down by 64% MoM, mainly due to reduced demand for palm acid oil and stearin. In contrast, exports to the European Union (EU) doubled, supported by higher palm oil mill effluent and crude palm oil shipments. Exports to Africa decreased by 26%, notably due to a significant drop in shipments to South Africa. Exports to the Asia Oceania region rose by 38%, with the Philippines and Japan as major destinations. Additionally, Malaysia exported 33,622 mt of used cooking oil, a 10% increase from Feb-25.
Indonesia's palm oil prices fell to USD 1.53 per kilogram (kg) in W12, down 1.92% week-on-week (WoW) but still 53% higher YoY. Despite strong Feb-25 exports, the recent price dip suggests short-term market adjustments, likely influenced by increased supply and global demand fluctuations. If export momentum continues, prices could stabilize or rise, especially if demand from key buyers like India remains strong. However, further supply growth or external economic pressures may limit price recovery. Future trends will depend on global edible oil competition, policy changes, and weather conditions affecting production.
Malaysia's palm oil prices decreased to USD 1.06/kg in W12, reflecting a 2.75% WoW drop but a significant 15.22% YoY increase. Prices are projected to range between USD 992.45 to 1,037.56/mt (MYR 4,400 and 4,600/mt) in Mar-25. Despite weaker demand from traditional markets like India and China, shifts toward emerging regions such as Sub-Saharan Africa, which is seeing rapid population growth, are helping sustain demand. Additionally, global vegetable oil consumption, especially for biodiesel, is forecasted to decline in 2025, with Indonesia projected to experience growth in biodiesel production. Malaysia's palm oil production also hit a three-year low in early 2025 due to harvest delays. However, a recovery in production is expected later in the year, which could stabilize supply and potentially put upward pressure on prices, especially as the global vegetable oil market continues to adjust.
In W12, Thailand's palm oil prices reached USD 1.10/kg, a decline of 2.65% WoW and a 12.24% YoY increase from USD 0.98/kg. This comes despite higher crude palm oil (CPO) production, which grew to 2.9 mmt in early 2025 from 2.75 mmt in early 2024. Weaker export demand from key markets like India and China, along with government efforts to maintain high biodiesel stockpiles, has limited domestic consumption growth, exerting downward pressure on prices. While rising production strengthens domestic supply, subdued demand may cap price gains. The government’s biodiesel policy could further suppress prices, potentially leading to stabilization or declines in the medium term.
Importers and biofuel producers should secure long-term contracts with Colombian suppliers to take advantage of the sector's recovery and expanding cultivation. Given the 5.3% YoY production growth in early 2025, traders should prioritize Colombian palm oil to diversify sourcing and hedge against supply risks from Southeast Asia. Additionally, investing in refining capacity within Colombia could enhance competitiveness and ensure consistent supply as production scales up.
Buyers should capitalize on Indonesia’s reduced export taxes and rising output, which have driven a 62.2% MoM surge in exports, making its palm oil more competitively priced than Malaysia’s. Securing Indonesian crude and refined palm oil now could offer cost advantages before potential policy shifts, such as a higher biodiesel mandate, and tightening supply. Importers should also monitor the evolving export levy structure and plan procurement strategies accordingly.
Exporters, particularly from Malaysia, should diversify their market focus beyond China and India by targeting high-growth regions like Sub-Saharan Africa and Southeast Asia. The doubling of EU imports and increased shipments to the Asia-Oceania region highlight opportunities in markets with shifting demand patterns. Companies should engage in targeted trade promotions and consider optimizing product formulations, such as specialty palm oil blends, to cater to diverse consumer and industrial needs.
Sources: Tridge, UkrAgroConsult
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