India Vegetable Oil Producers’ Association (IVPA) has said the current premium of palm oil prices over soyabean oil may not be able to continue for long.
Making a presentation titled “Strategic shifts in the global veg oils and navigating the Indian veg oil sector” at the “UOB Kay Hian 2025 Pre-POC Seminar” in Malaysia on Monday, Sudhakar Desai, President of IVPA, said the current premium of up to $50 a tonne of palm oil over soya might be unsustainable. “With incremental soya oil supplies expected to rise by 3.8–4 million tonnes (mt) from producers in Brazil and the US, the market is likely to compel a reduction in palm oil’s premium during the second half of the year,” he said.
On his palm oil price forecast, Desai said BMD (Bursa Malaysia Derivatives) will be in 4,200-4,800 (Malaysian) ringgits range during April-June 2025 and will be trending lower at 3,800-4,400 ringgits range during July-September 2025. “During the second half of the year, palm oil might trade in the range of 3,700-4,200 ringgits to regain the market share vs rival oil due to production increase despite the emerging B40 mandates,” he said.
Changes in import
On market demand and price elasticity in the Indian market, he said the demand for palm oil has fallen steeply, ceding market share to rival oils due to price elasticity. This shift confines palm oil largely to its core demand in the food service sector, a trend that may have long-term implications for market stability and pricing strategies.
Highlighting the transformation of import composition in India, he said a significant shift noted was the dramatic increase in the share of refined palmolein in the import basket — from 20 per cent in previous years to an estimated 45-50 per cent today. This change has intensified calls within the industry for higher duty differentials, reflecting deeper competitive pressures and market repositioning.
On the impact of import duty adjustments in India, Desai said rising duties in India have not yet translated into achieving minimum support prices. This disconnect is largely due to depressed prices for de-oiled cakes and other by-products, highlighting the complexities within domestic pricing mechanisms and the broader supply chain.
Surge in SAFTA imports
An unexpected consequence of the duty hikes has been the surge in zero-duty imports from SAFTA member countries. This development is reshaping traditional trade routes into India, prompting stakeholders to reconsider long-established supply chains and competitive strategies, he said.
Underscoring the importance of regional production insights in the global vegetable oil sector, Desai forecasted overall import demand for vegetable oils at 16 mt during this oil year. Giving a break-up of this, he said approximately 7.8 mt will be palm oil, 4.7 mt will be soya oil, and 3.5 mt will be sunflower oil.
He contrasted Malaysia’s stagnant palm production of around 19 mt with Indonesia’s potential increase of about 2 mt, emphasising that these regional dynamics could significantly influence global market shares.
“Our analysis today goes beyond surface-level market fluctuations. It’s about understanding the intricate balance of policy, production, and market dynamics that together shape the global vegetable oil landscape. Only with deep, strategic insight can stakeholders position themselves for sustainable success in this evolving market,” he said.