InfoSAWIT, MUMBAI — India’s recent shift in edible oil consumption from palm oil to soybean oil is expected to be temporary. According to CPOPC Director of Policy and Strategy, Chandran Gunalan, Indian consumer preferences are highly sensitive to short-term price movements rather than long-term structural changes.

Gunalan explained that major soybean-producing countries such as the United States and Brazil are aggressively expanding their biodiesel mandates, which will tighten global soyoil supplies for export. “Producer countries’ biodiesel policies will absorb more soybean oil. So India’s shift to soyoil will not be permanent,” he told Informist.

Import Tariff Revision Boosts CPO Demand

Since India reduced its crude palm oil (CPO) import duty from 20% to 10% on 30 May, CPO imports into the country have surged. Meanwhile, the duty on refined palm oil remains at 35.75%, widening the tariff gap from 8.25% to 19.25%.

This has revived palm oil imports. India imported 3.4 million tons of palm oil between June and September, up 27% from last year. In September alone, imports reached 824,761 tons—nearly double the 2024 volume.

India is known as an extremely price-sensitive market. “A price difference of just US$10 can shift demand between palm oil and soyoil,” Gunalan said, as quoted by InfoSAWIT from Informist Media on Sunday (30/11/2025).

From January to May, India’s palm oil imports fell to 1.6 million tons from 2.3 million tons last year, while soyoil imports climbed to 1.8 million tons. This was triggered by palm oil prices that were slightly higher than soyoil, coupled with trader concerns over a possible import tax hike.

After the tariff adjustment, palm oil imports recovered, while imports of RBD palmolein plunged to 0 tons in September from 84,279 tons a year earlier.

Gunalan expects India’s palm oil imports to reach 4–5 million tons in 2026, while 2025 imports are projected at a lower 3 million tons.

Responding to market concerns over potential supply tightening due to Indonesia’s B50 biodiesel ambition, Gunalan assured that exports will not be significantly affected. The additional palm oil required for B50 is estimated at just 1–2 million tons.

“Indonesia’s stocks are strong. There’s no indication of looming shortages that would disrupt exports,” he stressed.

Global Palm Oil Production Outlook

Gunalan forecasts global palm oil output at around 82 million tons in 2025, rising to 82–83 million tons in 2026. This is far above global soybean oil production, projected at just 70.8 million tons.

Brazil has raised its mandatory biodiesel blend from B14 to B15 as of August, increasing domestic soyoil consumption from 5.5 million to 6.4 million tons. In the United States, biodiesel policies also continue to absorb a large share of soybean oil production.

As of July 2025, Indonesia had produced about 30 million tons of palm oil and is targeting over 50 million tons by the end of the year. Malaysia remains confident of reaching its 2025 production target of 19.5 million tons.

Malaysia’s year-end stocks are projected at 2.5 million tons, while Indonesian stocks are expected to remain stable due to strong domestic consumption.

Price Outlook: Stable Through 2025–2026

Palm oil prices in 2025 are expected to move in the range of US$900–US$1,100 per ton, with a potential peak of US$1,200 if supply disruptions occur. For 2026, the price range is projected to remain at US$900–US$1,200 per ton.

Gunalan sees little possibility of prices returning to the record highs of 2022. “Prices have now normalized, though still slightly above pre-COVID levels,” he said. (T2)