Crude Palm Oil (CPO) Price Outlook 2025: Key Drivers and Forecasts
CPO prices have traded between MYR 3,800 and MYR 4,600 per tonne in Q1 2025. We break down the supply, demand, and policy factors shaping the rest of the year.
Crude palm oil prices on Bursa Malaysia Derivatives have traded in a wide band over the first quarter of 2025, oscillating between MYR 3,800 and MYR 4,400 per metric tonne. The volatility reflects competing pressures: tight Indonesian supply following La Nina-related flooding in Kalimantan on one side, and softening demand from India and China as both countries draw down strategic reserves on the other.
Looking into the second quarter, the consensus among commodity analysts points to a gradual firming of CPO prices. Indonesia's biodiesel mandate, which requires blending 40 percent palm-based fuel into diesel, continues to absorb a substantial portion of domestic production. This structural demand floor limits the downside even as global vegetable oil markets remain competitive.
The spread between CPO and competing oils, particularly soybean oil and sunflower oil, has narrowed compared to 2024. This has made palm oil more attractive to price-sensitive buyers in South Asia and North Africa, where procurement teams are actively substituting palm for more expensive alternatives. Nagara Global Trading has observed a meaningful uptick in enquiries from buyers in Pakistan, Egypt, and Morocco over the first quarter of this year.
From a supply perspective, the key variable to watch is Malaysia's production recovery. Output in Sabah and Sarawak was constrained in early 2025 by labour shortages and delayed replanting cycles. If the June to August flush season delivers above-average yields, the market could see a correction toward the lower end of the MYR 3,800 to 4,000 range.
For buyers with flexible procurement windows, the current price environment presents a reasonable opportunity to lock in medium-term contracts at levels that provide margin protection against a potential Q3 rally. Our trading desk is available to discuss structured pricing arrangements for volumes above 500 metric tonnes per month.