Fitch Increases 2025 Spot Price Forecast for Malaysian Crude Palm Oil

Fitch Ratings has raised its assumptions for Malaysia’s benchmark crude palm oil (CPO) spot prices for 2025 and beyond. However, it emphasized that it continues to expect better palm oil supply to result in weaker prices.

Fitch increased its benchmark price assumption for 2025 from USD 750/ton to USD 800/ton, while revising its previous average price assumption from USD 650/ton to USD 700/ton.

"Our higher assumptions reflect a slower recovery in Indonesia's production and increased biodiesel consumption in the country. Our elevated long-term price assumptions are based on cost inflation and our expectation of limited additional acreage for palm oil," Fitch noted, adding that palm oil prices are likely to rise in the fourth quarter of 2024 due to weakening production in Indonesia and Malaysia, coupled with a potential increase in demand from rising biodiesel blending in Indonesia in 2025.

"We expect CPO production to recover in 2025, aided by a weak La Nina," Fitch mentioned, indicating that CPO prices are likely to be under pressure in the coming months due to competition from now cheaper soybean oil.