PALMOILMAGAZINE, KUALA LUMPUR — Research firm BMI, part of Fitch Solutions, has raised its 2025 average price forecast for crude palm oil (CPO) to RM4,320 per ton, up from its previous estimate of RM4,150 per ton.
In its latest report, BMI explained that the upward revision reflects stronger import demand from India, the world’s largest palm oil buyer, which continued to support prices throughout the third quarter of 2025. As of October 27, 2025, the nearest-month CPO futures contract on the Bursa Malaysia Derivatives Exchange closed at RM4,335 per ton, with the year-to-date average at RM4,332 per ton.
Indian Demand Remains the Key Driver
BMI reported that India’s palm oil imports surged 43% quarter-on-quarter in Q3 2025, accounting for 56.9% of the country’s total vegetable oil imports, up from 52.4% in the previous quarter.
The rise was attributed to palm oil’s more competitive pricing compared to soybean and sunflower oils. However, BMI warned that the price gap with soybean oil has narrowed since August, which could slow import growth in the coming months as soybean oil becomes more competitive.
Despite this, the report emphasized that palm oil remains India’s preferred choice due to its affordability and reliable supply. Domestic consumption in India for the 2025/2026 season is expected to stay strong, supported by low local stock levels and an estimated 11.5% increase in imports.
Global Output Rises, But Surplus Tightens
Globally, BMI projects world palm oil production to grow 1.8% to 80.1 million tons in the 2025/2026 season. Indonesia is expected to lead the growth, with output increasing 3.3% to 47.5 million tons, while global consumption is set to climb 2.5% to 78.5 million tons.
As a result, the global surplus is forecast to narrow to 1.6 million tons, down from 2.1 million tons in the previous cycle — indicating a continued tight market.
According to The Edge Markets (1 November 2025), Malaysia’s palm oil production is expected to rise slightly by 0.5% to 19.5 million tons, with peak harvesting occurring in October before gradually easing toward the end of the year. BMI expects Malaysian CPO stocks to remain elevated through early 2026 as production stays strong while demand softens.
2026 Outlook: Slight Correction, But Prices Stay High
Looking ahead, BMI predicts that CPO prices will ease slightly in 2026 to around RM4,300 per ton, as short-term supply pressures begin to ease. Nevertheless, prices are expected to remain elevated due to persistent long-term structural factors.
BMI highlighted three key reasons for the market’s ongoing tightness:
- Slower productivity growth,
- Limited expansion of new plantations, and
- Stricter sustainability standards in major producing countries such as Indonesia and Malaysia.
“With a combination of structural constraints and evolving global market dynamics, palm oil prices are likely to remain at elevated levels in the coming years,” BMI stated in its report. (P2)
