BMI maintains average annual CPO futures price at RM4,150 per tonne this year
In a note today, BMI said that as of the market's closure on June 27, front-month CPO contracts settled at RM3,986 per tonne, bringing the year-to-date average to RM4,360 per tonne.
"Accordingly, we expect palm oil prices to trade between RM3,800 per tonne and RM4,000 per tonne for the remainder of 2025," it said.
BMI said palm oil prices came under significant pressure throughout the second quarter (2Q), declining by 17.7 per cent in the quarter-to-date, driven by weaker global crude prices, improved Malaysian output and subdued demand.
However, it said the market found some "support" in June following a brief rally, sparked by both geopolitical and policy developments.
"Prices rose by around six per cent between June 12 and June 16, initially as global crude oil prices surged in the wake of the Israel-Iran conflict.
"This rally was further reinforced by the United States Environmental Protection Agency's (EPA) announcement of sharply higher proposed biofuel blending targets for 2026 and 2027, with the 2026 target representing a 67.5 per cent year-on-year (y-o-y) increase," it said.
While these proposals primarily buoyed soya oil, the resulting strength in the broader edible oils complex also benefited palm oil prices, it added.
Meanwhile, BMI expects Malaysian palm oil output to reach 19.5 million tonnes in the 2025/2026 season, representing a y-o-y increase of 0.5 per cent.
"In our 1Q 2025 price forecast update, we highlighted that ongoing production challenges in Malaysia were providing support to palm oil prices, as data from the Malaysian Palm Oil Board indicated a 5.9 per cent y-o-y reduction in crude palm oil output during 1Q 2025.
"However, we also anticipated that Malaysian crude palm oil production would recover over the coming months," it said, adding this expectation has been validated as of the latest available monthly data (May), with cumulative output in April and May 2025 totalling 3.5 million tonnes, a y-o-y increase of 7.8 per cent.
BMI said this recovery has helped alleviate some of the recent tightness in the global market, exerting downward pressure on prices.
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