CPO prices could trade at a premium to soybean oil as early as April

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CPO premium over soybean oil

Highlights

Crude palm oil prices could trade at a premium to soybean oil as early as April due to global supply disruptions and reduced exports.
RBD palm olein could rise to U.S.$1,300 per tonne if Black Sea shipping corridors stabilize and Strait of Hormuz tensions ease, lowering energy prices.
Malaysia's palm oil inventories surged 7.48% to 2.82 million tonnes in August, but are expected to decline over the next five months, leading to tighter regional supplies.

This article was translated from the original. Read the original version by our correspondent here.

Price outlook and market drivers

As reported by The Edge Malaysia, industry analyst Thomas Mielke said crude palm oil prices could move to a premium over soybean oil as oil supplies decline and exports shrink in the global market.

He said prolonged disruptions to sunflower oil exports from Russia and Ukraine could also support CPO prices as buyers switch to alternative vegetable oils such as palm oil. According to Mielke, the market most sensitive to prices is India, which is not only the largest importer but also the quickest to cut imports when prices rise.

For refined, bleached and deodorized palm olein, Mielke sees upside potential to U.S.$1,300 per tonne if a safe shipping corridor is established in the Black Sea and tensions in the Strait of Hormuz ease, helping to lower energy prices. The benchmark palm oil futures contract for January 2027 delivery closed at RM4,635 per tonne on Bursa Malaysia Derivatives on Tuesday.

Malaysia's stocks and regional implications

Mielke also said he is not concerned about Malaysia's currently high palm oil stock levels, as he expects inventories to decline over the next five months as slow production growth fails to keep pace with rising consumption.

Data from the Malaysian Palm Oil Board show that Malaysia's palm oil inventories rose 7.48%, or 196,590 tonnes, to an eight-month high of 2.82 million tonnes in August, from 2.62 million tonnes in July. If consumption continues to rise faster than production, this could further tighten regional supplies and support prices in the vegetable oil sector.

In our previous coverage of forecasts for high crude palm oil (CPO) prices ahead of 2027, we explained how Indonesia's biodiesel mandate (B50), El Niño weather risks and declining global stocks could tighten supplies. We also discussed expectations of lower production and exports, including in Malaysia, which could continue to support prices as domestic demand rises in key producing countries.

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