KUALA LUMPUR (Feb 26): Prices of crude palm oil (CPO) futures contracts are expected to drop after the Ramadan season as production picks up, according to industry expert Dorab Mistry, director of Godrej International Ltd.

Mistry forecasted that CPO futures on Bursa Malaysia Derivatives (BMD) would trade between RM4,000 and RM4,600 per tonne from January to March before easing to RM3,600–RM4,100 per tonne between April and November this year.

At 5pm, the benchmark of palm oil futures for May delivery stood at RM4,597 per tonne on BMD.

"After Ramadan, I anticipate a significant rise in palm oil production, which will drive prices lower. Palm oil production is expected to be better this year compared with 2024, given (production) in Indonesia will be higher by at least two million tonnes,” Mistry said at the Palm and Lauric Oils Price Outlook Conference and Exhibition, hosted by Bursa Malaysia.

He pointed out that Indonesia has taken action to eliminate fraudulent activities related to waste oils and used cooking oil (UCO).

Last month, Indonesia imposed immediate restrictions on the export of used cooking oil and palm oil residue, including palm oil mill effluents, to support its new B40 biodiesel blending mandate.

Consequently, this will add to the supply of CPO and lauric oils in the market, according to Mistry.

Other factors that may impact CPO prices, he said, include US tariffs, sanctions and trade policies under Donald Trump's administration, energy price trends, North American weather conditions, and the trajectory of the US dollar. 

Meanwhile, soybean oil futures are expected to rise, driven by political maneuvering over US biodiesel incentives, Mistry said.

He noted that various interest groups are likely to lobby the Trump administration for favourable policies. He did not offer a specific forecast for soybean oil futures.

"Remember, Trump has to address concerns in the farm sector… he can't ignore them completely. So, we may see soybean oil futures rise. However, this will depend on his actions regarding trade wars and tariffs," he added.

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