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Trade4go
Jul 11th, 2025
Original content
India's palm oil imports surged to an 11-month high of 953,000 metric tons (mt) in Jun-25, 61% higher month-on-month (MoM), driven by low domestic inventories and a USD 100/mt price discount compared to soybean and sunflower oils. The increase signals a recovery in palm oil's market share and supports drawdowns in inventories held by major producers Indonesia and Malaysia.
Total edible oil imports rose 30% MoM to 1.53 million metric tons (mmt), the highest since Nov-24, with sunflower oil imports 18% higher and soybean oil imports 9% lower. Analysts expect palm oil imports to remain strong in the coming months amid competitive pricing and rising production in key origin countries. India, the world's largest vegetable oil buyer, sources most of its palm oil from Indonesia and Malaysia, while soybean and sunflower oils are primarily imported from Argentina, Brazil, Russia, and Ukraine.
Indonesia raised its crude palm oil (CPO) benchmark price by USD 21.51 to USD 877.89/mt for Jul-25, up from USD 856.38/mt in Jun-25, according to the Ministry of Trade. Despite the increase, the export duty remains unchanged at USD 52/mt.
In addition to the duty, a 10% surcharge is imposed on CPO exports, with refined palm oil products taxed between 4.75% and 9.5% of the benchmark price. The government aims to boost total palm oil exports to 25 mmt in 2025, an increase of 1 mmt from the previous year.
Indonesia's crude and refined palm oil exports rose sharply by 53% year-on-year (YoY) to 1.88 mmt in May-25, driven by stronger demand as palm oil traded at a discount to rival oils like soybean oil and sunflower oil. Export value surged 71% YoY to USD 1.85 billion, according to the national statistics bureau, also known as Badan Pusat Statistik (BPS).
The export boost, mainly to India and South Asia, helped reduce Indonesia's elevated stock levels, which had climbed to 3.04 mmt by end-Apr-25, the highest since May-24. Between Jan-25 and May-25, cumulative exports reached 8.3 mmt, a rise from 8.01 mmt a year earlier. The increase in shipments is expected to tighten inventories and lend support to palm oil prices amid the peak production season. Figures exclude palm kernel oil, oleochemicals, and biodiesel, which are typically reported later by the Indonesian Palm Oil Association (GAPKI).
Malaysia's palm oil inventories declined for the first time in four months in Jun-25, falling 0.24% MoM to 1.99 mmt, according to a Reuters survey. The drop was driven by an unexpected 4.04% decline in crude palm oil output to 1.7 million tons, following production gains in Apr-25 and May-25.
Export demand remained strong, with palm oil product shipments estimated to have increased 4.16% MoM to 1.45 mmt, marking the fourth consecutive monthly rise. Analysts expect robust production growth in the third quarter, but sustained demand will be crucial to maintaining price stability. Official figures from the Malaysian Palm Oil Board (MPOB) are expected on July 10.
In W26 2025, Myanmar's palm oil reference price fell to a six-month low of USD 2.90 per viss (MMK 6,080/viss), equivalent to approximately USD 4.46 per kilogram (kg), following declining global prices. The drop continues a broader downward trend from USD 3.47/viss (MMK 7,280/viss) in early Jan-25, driven by lower cost, insurance, and freight (CIF) import prices and close monitoring of free-on-board (FOB) rates from Malaysia and Indonesia.
Despite weekly reference prices set by the Ministry of Commerce's (MOC) Supervisory Committee, market prices remain elevated. To combat overpricing and manipulation, the Department of Consumer Affairs (DOCA) is encouraging consumers to report violations. It also warns that legal action will be taken under the Essential Goods and Services Law.
Domestic demand for palm oil stands at 1 mmt annually, of which approximately 700,000 mt are imported, primarily from Malaysia and Indonesia, due to limited local production. Authorities are working with oil dealers and importers to stabilize prices and ensure consumer access to affordable palm oil.
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Indonesia's palm oil prices rose by 3.45% week-on-week (WoW) to USD 1.20/kg in W27, reflecting an uptrend with prices up 22.45% YoY from USD 0.98/kg. This price increase aligns with the government's decision to raise the benchmark CPO price by USD 21.51 to USD 877.89/mt for Jul-25, while keeping the export duty unchanged at USD 52/mt.
The consistent rise in benchmark and market prices indicates stronger global demand and tighter supply, especially as Indonesia aims to expand exports by 1 mmt to reach 25 mmt in 2025. However, the combined impact of a 10% export surcharge and additional levies on refined products may temper export competitiveness if rival producers maintain lower trade costs. In the near term, robust export volumes and elevated international benchmarks are expected to support firm domestic prices. However, sustained high prices could face resistance if buyers shift toward cheaper alternatives or if production growth outpaces demand in the second half of the year.
Malaysia's palm oil prices rose 2.15% WoW to USD 0.95/kg in W27, marking a 9.20% YoY increase from USD 0.87/kg. While recent short-term production gains, driven by favorable weather and post-flood recovery, temporarily lifted output to 1.38 mmt in Q2-2025, broader structural constraints signal potential long-term price upside.
Persistent labor shortages, aging plantations, and weather risks may limit Malaysia's palm oil output, projected to decline 1.5% YoY to 19 mmt in 2025. Despite inventories rising to 1.56 mmt in Mar-25, low prices near USD 919.78/mt (MYR 3,900/mt) may mark a floor. Structural constraints and rising demand, particularly from Indonesia's biodiesel mandate and key Asian buyers, suggest a potential price recovery later in 2025.
In W27, Thailand's palm oil prices held steady at USD 0.99/kg, unchanged WoW but up 8.79% YoY from USD 0.91/kg. The recent stabilization follows a 25% surge in May-25 output, driven by favorable weather and increased demand from major buyers including India, China, and Myanmar. However, rising political uncertainty over the possible ousting of Thailand’s prime minister has raised investor concerns. If instability intensifies, it could disrupt trade flows and dampen domestic demand through weaker investment and manufacturing activity, posing downside pressure on prices. Nonetheless, strong external demand and export momentum may continue to support Thailand’s palm oil market in the near term, helping to buffer against internal political risks and maintain pricing stability.
Indonesia and Malaysia should formalize long-term supply agreements with Indian refiners and importers to secure stable palm oil flows amid growing import volumes and favorable price spreads. This can include expanding joint investment in logistics, refining, and warehousing infrastructure, while leveraging India’s tariff structures to reduce transaction costs and build resilience against market volatility.
To maintain palm oil's advantage over soybean and sunflower oils, Indonesia should assess the cumulative impact of its 10% export surcharge and refined product levies. Aligning fiscal measures with export goals—such as temporary reductions or tiered structures during peak demand—can enhance competitiveness, especially if rival origins maintain lower trade costs.
Producers in Indonesia and Malaysia should implement inventory management frameworks coordinated with exporters and key importers. Enhanced tracking of stock levels and synchronized shipment scheduling can help reduce domestic overhang, support international pricing, and prevent supply-demand mismatches during peak production months. This approach would also mitigate risks tied to seasonal output fluctuations and regional consumption trends.
Sources: Tridge, Ukr AgroConsult, Hellenic Shipping News
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