Palm Oil Price Forecast 2025: What African Traders Should Expect

As global food, biofuel, and industrial markets recalibrate after the shocks of recent years, palm oil remains a critical commodity — especially for African traders who depend on both import and export flows. Heading into 2025, several forces are shaping palm oil pricing: demand, supply constraints, competing oils, currency volatility, policy shifts, and trade trends. Here’s what traders in Africa need to know.

Key Trends & Data to Watch

• Global Demand & Biofuel Policies

  • Indonesia’s biodiesel mandates are tightening. The B40 blending policy (40% biodiesel share) is absorbing more crude palm oil (CPO) domestically, reducing export availability. Reuters
  • Demand from major buyers such as China and India is expected to increase especially as palm oil becomes more competitive vs other vegetable oils. Price parity (or near-parity) with soybean oil has made palm oil more attractive in these markets. Reuters

• Supply Conditions & Production Forecasts

  • Global palm oil production in 2025/26 is expected to grow to about 80.6 million tonnes, up ~2.4% year-on-year, driven primarily by Indonesia and Malaysia. Fitch Solutions
  • Malaysia is forecast to have only modest growth (≈0.5%) while Indonesia expects higher increases (~3.3%) in production. Fitch Solutions
  • However, weather risks—such as lower fresh fruit bunch yields due to dry spells or El Niño effects—continue to threaten supply in key producing regions. In Malaysia, dry weather and labour shortages have already affected output. IMARC Group+2mpoc.org.my+2

• Price Levels & Projections

  • According to BMI/FitchSolutions, the Malaysian crude palm oil (CPO) futures contract is forecast to average around MYR 4,150/tonne in 2025. Fitch Solutions
  • Afrinvest, focusing on global CPO, projects prices to rise to US$1,200 per metric ton by late 2025, up from current levels around US$900/tonne. Milling Middle East & Africa
  • In Africa, import and export prices have been elevated: in 2024, the import price averaged ~US$1,200/ton; refined palm oil imports made up the bulk of import value. IndexBox+1

• African Market Dynamics

  • Local currencies and transportation/logistics costs will continue to influence delivered prices. Weakening of local currencies against the USD tends to raise costs for imported palm oil. Nigeria is already seeing this effect. Milling Middle East & Africa+1
  • Domestic production in some African countries is rising but still insufficient to eliminate the need for imports/refined palm oil. For instance, Africa’s refined palm oil market was valued at US$14.4B in 2024, forecast to grow in both value and volume by 2035. IndexBox

What This Means for Prices in Africa in 2025

Putting the above together, here are the likely scenarios African traders should prepare for:

Risks & Wild Cards

African traders need to monitor several risk factors that could push prices outside predicted ranges:

• Policy Changes in Exporting Countries: Indonesia and Malaysia tweaking export levies, biodiesel mandates, or quotas. For example, Indonesia’s export levy proposed to rise to 4.5-10% to support higher biodiesel blending. Reuters
• Global Vegetable Oil Competition: Prices for soybean oil or sunflower oil could shift due to crop success/failure, affecting how competitive palm oil is. If soybean harvests in South America are strong, that may ease some pressure.
• Weather/Climate Events: El Niño, droughts, flooding, or labour disruptions have already been affecting Malaysia’s yield and could recur.
• Currency Fluctuations: In many African countries, importers pay in foreign currency (USD, MYR, etc.). If local currency depreciates sharply, that adds to cost massively.

Trade & Regulatory Barriers: Increased sustainability regulations (EU, UK, etc.), certification demands, or import tariffs may make exporting or importing more expensive. Local policy instability could also raise costs.

What Traders Should Do to Prepare

To navigate 2025 successfully, African palm oil traders should consider these strategies:

1. Lock in Forward Contracts Early
   Prices are rising; securing supply now (or selling now, if you’re an exporter) under contract protects against future price spikes.

2. Monitor Biofuel Policies Closely
   Changes in mandates (e.g., increased blending) in Indonesia, Malaysia, India, or others can shift demand significantly. African producers/exporters could gain if supply tightens elsewhere.

3. Currency Hedging & Local Currency Risk Management
   Since many inputs (fuel, fertilizer, shipping) are priced in USD or other foreign currencies, weak local currencies add cost. Hedging or forward purchase of inputs could help.

4. Invest in Local Processing & Quality Upgrades
   Refined palm oil often sells at a premium. Countries with refining capacity will fare better. Quality upgrades, certification (if required), and efficiency in milling reduce losses and increase margins.

5. Watch Competing Oils
   Keep tabs on global soybean, sunflower, and rapeseed markets: prices, yields, trade flows. If those oils become cheaper, demand for palm oil could suffer in certain markets or use-cases.

6. Sustainability & Compliance
   Global buyers are increasingly requiring sustainability credentials. Meeting demand for certified, deforestation-free palm oil can help avoid trade penalties and possibly command price premiums.

Forecast Summary: Where African Palm Oil Prices Might Land

Taking all these into account, here’s a forecast tailored for many African markets in 2025:

• Mid-2025: Price pressure upward; expect crude palm oil being traded at approx US$1,000-1,200/MT FOB/major ports (subject to quality, logistics). Refined palm oil could reach US$1,200-1,400/MT where processing is available.

• Late 2025: Potential for price spikes due to supply tightening or policy enforcement. If upward upside scenario plays out, refined palm oil may breach US$1,400-1,500/MT in certain markets.

• Importers vs Exporters: Importers (countries that don’t produce enough) will likely face sharper increases due to foreign exchange and shipping costs. Exporters who refine locally will capture more margin.

Conclusion

For African traders, 2025 looks like a year where palm oil prices will generally trend upward—even under moderate supply growth—driven by biofuel policies, competitive demand from Asia, and global supply constraints. The key to benefit will be managing risk: securing supply early, controlling costs, improving processing, and leveraging regional trade frameworks (like AfCFTA) to minimize tariff and non-tariff costs.

Traders who are proactive, informed, and nimble are likely to outperform in this environment. Be ready: prices rising is not just likely—but in many cases already underway.