1. Weekly News

Indonesia

Indonesia Hikes CPO Export Levy to 10% to Support B40 Biodiesel Rollout Despite Export Concerns

Indonesia will raise its crude palm oil (CPO) export levy from 7.5% to 10% to fund its national biodiesel program and replanting initiatives. Regulated by the Ministry of Finance, the new levy structure applies to CPO and related derivatives and supports the B40 mandate, which requires a 40% palm oil blend in diesel. While the policy aims to enhance energy security and farmer livelihoods, industry stakeholders, including the Indonesian Palm Oil Association (GAPKI), warn it could undermine export competitiveness due to increased costs. CPO production fell to 47.8 million metric tons (mmt) in 2024, and the B40 rollout is expected to reduce exports by 2 mmt. Despite export volume declines, the government projects the program will yield economic, environmental, and employment benefits.

Indonesia's Palm Oil Export Tax Hike Set to Raise Import Costs in Africa and Tighten Global Supply

Indonesia's decision to raise its CPO export tax from 7.5% to 10% is expected to increase import costs globally, with pronounced effects in Africa. Effective May 17, 2025, the measure aims to boost downstream productivity and support smallholder farmers. However, it may reduce the competitiveness of Indonesian palm oil compared to Malaysian exports.

Relying heavily on palm oil imports from Southeast Asia due to insufficient domestic production, Africa is likely to see higher prices. Key importing countries such as Nigeria, Kenya, and South Africa may face increased costs, as importers are expected to pass on the additional levy. With Indonesia remaining the world's top CPO exporter at 24.2 mmt, this policy shift could tighten supply and elevate palm oil prices across the African market.

Malaysia

Malaysian Palm Oil Gains Ground in Algeria as Demand from Food Processing Sector Rises

Algeria has emerged as a promising market for Malaysian palm oil, with exports rising nearly 82% to 79,000 metric tons (mt) in 2024. Although palm oil represents a small portion of Algeria's annual cooking oil imports of 980,000 mt, demand is expected to grow due to the expansion of its processed food industry. Malaysia actively promotes palm oil in various sectors, including confectionery, margarine, and non-dairy creamers. Recent trade engagements, including Malaysia’s participation in Algeria's Djazagro exhibition, signal stronger bilateral cooperation and opportunities for collaboration in refining, oleochemicals, and product innovation.

Malaysia's Palm Oil Exports Rise in May-25 as China Ties Strengthen and Price Competitiveness Improves

Malaysia's palm oil exports rose between 6.6% and 14.2% in the first half of May-25, supported by firm futures prices and improved price competitiveness. Futures on the Bursa Malaysia Berhad (Bursa Malaysia) surpassed USD 912.54/mt (MYR 3,850/mt), while a planned export duty cut from 10% to 9.5% in Jun-25 is expected to further enhance global competitiveness. Strengthening trade ties with China, particularly in the food, cosmetics, and biofuel sectors, are bolstering Malaysia's export outlook. In contrast, India reduced palm oil imports by 53% in Apr-25 amid high prices and rising domestic output. Meanwhile, Indonesia's export duty hike to 10% may shift some demand toward Malaysia, though analysts forecast potential price softening to USD 880.63/mt (MYR 3,733/mt) by quarter-end due to macroeconomic pressures.

Malaysian Palm Oil Production Surges in Apr-25 as Market Volatility Persists and Demand from China and India Rises

Malaysian palm oil production surged by 298,000 mt in April 2025 as harvesting resumed post-monsoon disruptions. This surge contributed to a 303,000 mt increase in inventories, reaching a six-month high amid subdued exports. Sub-Saharan Africa led export growth, up 24% in the first four months of 2025, while other regions declined.

Prices are expected to stay between USD 888.84/mt and USD 959.94/mt in May-25, following an 18% month-on-month (MoM) drop from Apr-25 due to volatile energy markets and higher Organization of the Petroleum Exporting Countries (OPEC) output. Narrowing price gaps with soybean oil in China and India are likely to support demand. India's import duty cut made palm oil USD 15 cheaper than soybean oil, while prices reached parity in China by mid-May, encouraging import demand ahead of peak summer consumption.

Nigeria

Indonesia's Higher Export Levy Set to Push Up Nigeria's Palm Oil Prices Amid Import Dependence

Nigeria's palm oil prices are expected to rise following Indonesia's decision to increase its CPO export levy from 7.5% to 10%. As Indonesia is the world's largest palm oil producer and a key supplier to Nigeria, the policy shift may constrain imports and tighten domestic supply. The Indonesian Ministry of Finance stated that the move aims to boost productivity and value-added processing for smallholder farmers. Nigeria, which produces around 1.4 mmt of palm oil annually against a demand of 2.5 mmt, remains heavily reliant on imports. Despite a recent price dip in local markets, stakeholders warn that continued reliance on Indonesian supplies leaves Nigeria vulnerable to global market shifts.

2. Weekly Pricing

Weekly Palm Oil Pricing Important Exporters (USD/kg)

Yearly Change in Palm Oil Pricing Important Exporters (W21 2024 to W21 2025) 

Indonesia

Indonesia's palm oil prices increased by 1.69% week-on-week (WoW) to USD 1.20 per kilogram (kg) in W21, supported by higher global vegetable oil prices and pre-policy adjustment buying activity. However, the recent increase in the CPO export levy from 7.5% to 10%, effective May 17 could reverse this trend in the coming weeks. The higher levy, combined with existing export burdens such as the export tax and domestic market obligation (DMO), which total USD 221/mt, is expected to raise export costs, making Indonesian palm oil less competitive globally. This could slow export volumes and pressure domestic prices downward, especially as refiners and exporters pass costs back to producers. Smallholders may face reduced farmgate prices for fresh fruit bunches (FFB), potentially weakening upstream margins.

Malaysia

Malaysia’s palm oil prices held steady at USD 0.91/kg in W21, showing no weekly change but experiencing a 1.09% MoM decline. The price softness reflects growing supply-side pressure as palm oil stocks rose by 300,000 mt in Apr-25 to 1.87 mmt, driven by a 12% MoM production increase to 1.69 mmt. The bulk of this growth came from Sabah and Sarawak. Reduced domestic consumption and weak exports, down 11% from Mar-25 and 13% YoY, further contributed to stock accumulation. The current oversupply, coupled with tepid demand from key markets like India, is likely to maintain downward pressure on prices in the short term. However, future price support may emerge from a recovery in exports, as Malaysia's palm oil remains competitively priced compared to other vegetable oils. Tightening global supplies of soybean and sunflower oil could also shift demand toward palm oil, potentially stabilizing or lifting prices in the coming months.

3. Actionable Recommendations

Strengthen Trade Diversification and Market Development

Palm oil exporters, particularly from Malaysia, should expand market penetration in emerging regions such as North and Sub-Saharan Africa. Indonesia’s export levy is expected to raise costs and limit supply in these markets, creating an opportunity for alternative suppliers. Strategic trade missions, tariff negotiations, and promotional campaigns in markets like Algeria, Nigeria, and Kenya can help secure long-term contracts, boost demand, and reduce overdependence on traditional Asian buyers.

Enhance Downstream Processing and Value-Added Product Development

Producers and exporters should invest in domestic refining and oleochemical production to capitalize on the rising global demand for value-added palm oil derivatives in the food, cosmetics, and biodiesel sectors. Strengthening processing capabilities will increase profit margins, improve export competitiveness against raw CPO, and align with Indonesia’s policy shift favoring downstream development.

Monitor Regional Supply Shifts and Adjust Procurement Strategies

Importers, especially in Africa and South Asia, should closely monitor regional policy changes, production trends, and pricing developments in both Indonesia and Malaysia. Establishing flexible sourcing strategies, including greater reliance on Malaysian suppliers or alternative vegetable oils, will help mitigate supply risks and manage cost volatility arising from Indonesia’s new levy structure.

Sources: Tridge, Ukr AgroConsult, GAPKI