1. Weekly News

India

India's Vegetable Oil Stocks Tighten, Boosting Import Demand and Price Pressures

India's vegetable oil stocks fell to a five-year low of 1.35 million metric tons (mmt) as of May 1, 2025, driven by a 24% drop in palm oil imports in Apr-25, according to the Solvent Extractors' Association of India (SEA). Despite the low inventory, SEA stated there is no edible oil shortage due to robust domestic production and ongoing imports from Nepal. However, tight stocks may increase palm and soybean oil imports, potentially supporting Malaysian palm oil prices and the United States (US) soybean oil futures. Edible oil inflation in India reached 17.4% in Apr-25, its highest since 2022, fueled by high crude palm oil (CPO) prices and weak demand for oilseed meals amid rising ethanol by-product supplies.

Indonesia

Indonesia Seeks New Palm Oil Markets Amid India-Pakistan Tensions

The Indonesian Ministry of Agriculture (Kementerian Pertanian) has announced plans to explore new markets for palm oil exports as a precautionary measure amid rising tensions between India and Pakistan. The Ministry Director stated that potential markets include countries in Africa, South Africa, and East Asia. While the conflict has not yet significantly impacted exports, the government is taking proactive steps to ensure market stability and resilience. These efforts align with Indonesia's broader strategy to diversify export destinations and strengthen its global palm oil footprint.

Indonesia Raises CPO Export Duty to Fund Biodiesel Expansion and Palm Oil Subsidies

Indonesia will raise its CPO export duty from 7.5% to 10% of the base price starting May 17, 2025, to support its expanded biodiesel mandate, according to a government decree. Export duties on other palmolein products will also increase. The additional revenue will fund subsidies for biodiesel production, palm oil development, and smallholder replanting programs. The move follows Indonesia's shift to a 40% palm-based biodiesel blend this year, with plans to increase to 50% by 2026. Biodiesel consumption reached 4.44 billion liters (L) by April, with a 2025 allocation of 15.6 billion L.

Malaysia

US-China Tariff Reduction Boosts Malaysian Palm Oil Demand and Export Prospects for Q2-2025

The temporary 90-day tariff reduction agreement between the US and China is expected to benefit the Malaysian palm oil market by boosting global demand and reducing recession risks. Lower tariffs on both sides will support trade recovery, enhance demand for vegetable oils, and indirectly strengthen biodiesel production through higher crude oil prices. Malaysian palm oil producers maintain a competitive edge in the US market with a lower import tariff of 10% compared to 30% for Chinese products. This development, alongside ongoing US-Malaysia trade talks, is likely to support palm oil exports and contribute to Malaysia’s economic growth in Q2-2025.

Malaysia's Palm Oil Exports and Stocks Rise Sharply in Apr-25

According to the Malaysian Palm Oil Board (MPOB), Malaysia's palm oil exports rose 9.62% in Apr-25 to 1.10 mmt, supported by a 21.52% increase in CPO production. CPO stocks rose 34.83% to 1.05 mmt, while total palm oil stocks grew 19.37% to 1.87 mmt. Palm kernel oil and biodiesel exports surged by 77.02% and 57.81%, respectively. The rise in production and export volumes reflects strong market activity, despite adjustments in global biofuel demand, including a revised US outlook for soybean-based biofuel use.

2. Weekly Pricing

Weekly Palm Oil Pricing Important Exporters (USD/kg)

Yearly Change in Palm Oil Pricing Important Exporters (W20 2024 to W20 2025)

Indonesia

Indonesia's palm oil prices fell to USD 1.18 per kilogram (kg) in W20, marking a 1.67% week-on-week (WoW) decline despite a 34.09% year-on-year (YoY) increase. The short-term price drop reflects growing market concerns over export competitiveness as the government plans to raise the palm oil export levy from the current 7.5% range to 10% effective May 17, 2025. The Indonesian Palm Oil Association (GAPKI) has urged a delay in the levy hike, citing heightened global trade risks. Indonesia already faces potential 32% US tariffs, higher than Malaysia’s 24%, which could erode its price advantage in key markets. The planned export levy hike may pressure Indonesian palm oil prices in the short term by weakening export demand, especially amid geopolitical tensions and delayed purchases from India and Pakistan. While long-term support could come from domestic biodiesel absorption, near-term volatility is likely until there is clarity on levy policy, US tariff decisions, and regional stability.

Malaysia

Malaysia's palm oil prices held steady at USD 0.91/kg in W20, with no weekly changes despite a 3.19% month-on-month (MoM) decline, reflecting market pressure from rising inventories and weaker export demand. Apr-25 production rose 12% to 1.69 mmt, driven by strong output in Sabah and Sarawak, while exports fell 11% to 1.10 mmt. Stocks reached 1.87 mmt, their highest in recent months, due to lower domestic use and sluggish overseas demand. Although prices may remain under pressure in the short term, expectations of improved exports, amid competitive pricing and reduced global supply of alternative oils, could support a future price rebound.

Thailand

In W20, Thailand's palm oil prices rose to USD 0.97/kg, an increase of 2.11% WoW and 14.12% YoY, supported by stable domestic demand and policy optimism. The price increase reflects improved market sentiment amid ongoing trade talks with the US, which could avert a proposed 36% tariff on Thai goods. Positive signals from US officials regarding Thailand's proposals to reduce its trade surplus and enhance market access have helped ease concerns over potential export disruptions. If negotiations succeed, Thailand's palm oil exports may gain a competitive edge, potentially supporting further price stability or moderate increases in the near term.

3. Actionable Recommendations

Diversify Export Markets and Strengthen Regional Partnerships

Indonesian and Malaysian exporters should accelerate efforts to expand into under-tapped markets in Africa, East Asia, and the Middle East. This diversification will reduce reliance on politically sensitive markets like India and Pakistan and help stabilize trade flows amid rising geopolitical risks.

Leverage India's Tight Inventory and Inflation Pressures

Malaysian palm oil suppliers should proactively engage Indian importers by offering competitive long-term contracts, emphasizing reliable supply and pricing stability. This approach could capture market share as India seeks to offset domestic shortages and rising edible oil inflation.

Adjust Export Pricing Strategies Ahead of Levy and Tariff Changes

With Indonesia's upcoming export duty hike and possible US tariff adjustments, exporters should reassess short-term pricing strategies to maintain competitiveness. Offering flexible pricing or shipment terms can help mitigate demand disruptions and support export volumes through volatile periods.

Sources: Tridge, Ukr AgroConsult, Business Recorder, MSN