Sawit News: CPO Prices Depressed by US-China Trade War, CIMB Optimistic
Trade Tensions, Tariffs impact Palm Oil Prices
Table of Contents
- Trade Tensions, Tariffs impact Palm Oil Prices
- Palm Oil Prices: Your Top Questions Answered
- What is influencing crude palm oil (CPO) prices?
- How do crude oil prices affect palm oil?
- Is the impact of falling crude oil prices on palm oil significant?
- How do palm oil price fluctuations affect plantation companies?
- what are the U.S. tariffs on palm oil?
- Why did the U.S. implement these tariffs?
- How will the tariffs affect palm oil prices for U.S. consumers?
- What alternatives to palm oil are available to U.S. consumers?
- How big is the U.S. market for palm oil?
- How do the tariffs affect palm oil producers in malaysia and Indonesia?
- How is China responding to these trade tensions?
- What is the impact of China’s tariffs on U.S. soybeans?
- How might a shortage of soybean oil indirectly impact the palm oil market?
- Summary of Key Impacts
KUALA LUMPUR (April 10, 2025) – Trade friction between the U.S. adn China, coupled with declining global crude oil prices, are expected to significantly influence crude palm oil (CPO) prices, according to CIMB Securities. the firm, in a research note released Monday, anticipates short-term pressure on CPO prices but remains optimistic about long-term prospects.
Crude Oil Prices and Biodiesel
CIMB analysts suggest that the weakening price of crude oil could undermine the economic viability of biodiesel programs, thereby reducing demand for CPO.Despite this headwind,the firm maintains its average CPO price forecast for 2025 at RM4,200 per ton.
Impact on Plantation Companies
The report indicated that fluctuations of RM100 per ton in CPO prices could affect fiscal year 2025 earnings for plantation companies by 3% to 7%. While acknowledging increased short-term risks, CIMB maintains an “overweight” suggestion for the palm oil sector, citing limited direct exposure to U.S.tariffs and potential long-term supply constraints.
US Tariffs on Palm Oil
As part of ongoing trade disputes, the U.S. government has imposed a 10% import tariff on palm oil. This tariff is slated to increase to 24% for products originating from Malaysia and 32% for those from Indonesia, effective April 9.
CIMB believes the tariff hike will increase palm oil prices for U.S. consumers, potentially leading them to switch to cheaper alternatives like soybean oil. This shift could benefit U.S. soybean farmers.
Though, the U.S. market represents a small fraction of global palm oil consumption, accounting for approximately 1.9 million tons out of a total of 78 million tons (2.4%). In 2024, Malaysia exported about 191,000 tons of palm oil to the U.S., representing only 1.1% of the country’s total palm oil exports.
Malaysia vs. Indonesia: Tariff Disparity
According to The Edge Malaysia, CIMB analysts pointed out that the 8% tariff differential between Malaysia and Indonesia could create opportunities for malaysian producers to gain market share in the U.S. Currently, Indonesia accounts for about 85% of U.S. palm oil imports, while Malaysia accounts for 10%.
China’s Retaliation
China has escalated trade war tensions by announcing an additional 34% tariff on all U.S.goods, effective April 10. This follows a previously imposed 10% tariff.
The combined 44% tariff could effectively exclude U.S. soybeans from the Chinese market, which has historically absorbed 52% of U.S. soybean exports. Consequently,China is expected to increase soybean purchases from Brazil,Argentina,and other producing nations,although logistical challenges could limit their ability to fully meet demand.
Potential Impact on Vegetable Oil Market
CIMB cautioned that if China reduces soybean processing, it could affect the availability of domestic soybean oil, indirectly creating opportunities for palm oil. However,a shortage of soybean oil could also trigger new volatility in the broader vegetable oil market.
Palm Oil Prices: Your Top Questions Answered
Are you curious about the factors influencing palm oil prices? This article, based on a report by CIMB Securities, dives into the effects of trade tensions, tariffs, and global market dynamics, offering a comprehensive Q&A format to keep you informed.
What is influencing crude palm oil (CPO) prices?
According to CIMB Securities, trade friction between the U.S. and China, paired with declining global crude oil prices, are expected to have a meaningful impact on CPO prices. While short-term pressures are anticipated, the firm remains optimistic about the long-term outlook for palm oil.
How do crude oil prices affect palm oil?
CIMB analysts suggest that weaker crude oil prices could make biodiesel programs less economically viable, possibly reducing the demand for CPO. This is as biodiesel is sometiems made from palm oil, and as fossil fuel prices fall, the incentive to spend more to produce biodiesel is reduced.
Is the impact of falling crude oil prices on palm oil significant?
Despite the headwind from declining crude oil prices, CIMB Securities maintains its average CPO price forecast for 2025 at RM4,200 per ton, which suggests that it is indeed not a major factor.
How do palm oil price fluctuations affect plantation companies?
The report indicates that a RM100 per ton fluctuation in CPO prices could impact plantation companies’ fiscal year 2025 earnings by 3% to 7%. This highlights the sensitivity of the palm oil sector’s profitability to price changes.
what are the U.S. tariffs on palm oil?
The U.S. government has imposed import tariffs on palm oil as part of ongoing trade disputes. The current tariff is 10%, but this is set to increase to 24% for palm oil originating from Malaysia and 32% for products from Indonesia, effective April 9th.
Why did the U.S. implement these tariffs?
The provided text does not explicitly explain the reasons for the U.S. tariffs but frames them as part of “ongoing trade disputes.”
How will the tariffs affect palm oil prices for U.S. consumers?
CIMB believes that the tariff hikes will raise palm oil prices for U.S. consumers. This could lead consumers to seek cheaper alternatives like soybean oil.
What alternatives to palm oil are available to U.S. consumers?
Soybean oil is identified as a cheaper alternative to palm oil.
How big is the U.S. market for palm oil?
The U.S.market represents a small fraction of global palm oil consumption. It accounts for approximately 1.9 million tons out of a total of 78 million tons globally, which is about 2.4%. In 2024, Malaysia exported about 191,000 tons of palm oil to the U.S., which is just 1.1% of the country’s total palm oil exports.
How do the tariffs affect palm oil producers in malaysia and Indonesia?
The 8% tariff differential between Malaysia and Indonesia could create opportunities for malaysian producers to gain market share in the U.S. Currently, Indonesia accounts for about 85% of U.S. palm oil imports,while Malaysia accounts for 10%.
How is China responding to these trade tensions?
China escalated trade war tensions by announcing an additional 34% tariff on all U.S. goods, effective April 10. This is an increase on top of a pre-existing 10% tariff.
What is the impact of China’s tariffs on U.S. soybeans?
The combined 44% tariff could effectively exclude U.S. soybeans from the Chinese market, which has historically absorbed 52% of U.S. soybean exports. China is expected to increase soybean purchases from Brazil, Argentina, and other producing nations as a result.
How might a shortage of soybean oil indirectly impact the palm oil market?
CIMB cautions that if China reduces soybean processing due to the tariffs, it could affect the availability of domestic soybean oil, indirectly creating opportunities for palm oil. However, it also notes that a shortage of soybean oil could trigger new volatility in the broader vegetable oil market. This could affect the prices.
Summary of Key Impacts
Here’s a swift recap of the major factors influencing palm oil prices, summarized in this table:
| Factor | impact on Palm Oil | Specifics |
|—————————–|—————————————————–|——————————————————————————————|
| Trade Tensions | Short-term pressure; Long-term optimism | U.S. tariffs, China’s retaliation |
| Crude Oil Prices | Potential demand reduction via biodiesel | Weakening crude could undermine biodiesel program viability |
| U.S. Tariffs | Increased prices for U.S. consumers; shift to alternatives| 10% tariff, rising to 24% (Malaysia)/32% (Indonesia) |
| Malaysian vs. Indonesian Tariffs | Opportunities for Malaysian producers | 8% differential could shift market share |
| China’s Retaliation | Potential opportunities for palm oil | Reduced soybean processing in china; increased demand from other vegetable oils |