For manufacturers dependent on RBD Palm Kernel Olein (PKO), the immediate supply situation for the core raw material, Palm Kernel (PK), dictates trading confidence. While the headline figures for overall Malaysian palm oil appear robust—with CPO production peaking at 2.04 million MT in October 2025—the granular reality for kernels reveals a structural supply challenge. We are now entering the period where overall kernel production volumes are expected to decline by 5-8% month-over-month into the new year due to seasonal cycles, creating price inelasticity for buyers. This looming supply dip underscores the strategic importance of partners who can consistently deliver from a vast, diversified network.

Commodity houses that thrive in this complex environment understand that “A supply chain is only as strong as its weakest link at the origin,” a maxim that guides sourcing decisions for organizations like Tradeasia International. Their extensive palm and oleochemical sourcing ensures continuous material flow against these seasonal fluctuations. Further exacerbating the issue is the structural lack of production growth; the USDA forecast indicates that Indonesia’s CPO production for 2025/26 will rise by a modest 3% (Source: USDA Oilseeds and Products Annual). This marginal growth rate is quickly being absorbed by the nation's ambitious domestic B40 biofuel mandate and expanding oleochemical exports, leaving less available for the global trading market.

The Seasonal Headwind and Structural Shortfall

The market is being squeezed by both short-term seasonality and long-term structural issues. The end of the peak harvest period means processors must contend with reduced kernel input, translating directly into lower CPKO availability for RBD Olein conversion throughout Q4. Additionally, the lack of aggressive production growth, coupled with overwhelming domestic biofuel commitments, creates a sustained shortfall. This makes securing sufficient Crude Palm Kernel Oil (CPKO) increasingly challenging for refiners, regardless of CPO price movement.

The Unavoidable Premium: The Pressure from Certified PKO Demand

The most pressing constraint, however, is the increasing global demand for certified (traceable) feedstock, which directly impacts raw material availability. High-end buyers in Europe and North America are actively seeking sustainable material, making the origin of the CPKO feedstock paramount. Analysis on the sector highlights a shocking shortfall: only an estimated 10% to 12% of global PKO volume is currently flowing into high-grade capacity via certified schemes (Source: Oleochemicals Asia). This forces refiners into a bidding war for the limited certified supply, creating a 'green premium' where traceable CPKO, the RBD Olein raw material, consistently trades at a $50 to $150 per metric ton premium over conventional oil. This premium is unavoidable for firms with sustainability mandates. Traders must plan for continued supply tightness and volume restrictions for high-specification RBD PKO Olein throughout the remainder of Q4 2025, as the industry races to close this critical certification gap.

Sources:

  1. The $150/Ton Question: Navigating the RSPO Gap for Palm Kernel Diethanolamide - Oleochemicals Asia: https://www.oleochemicalsasia.com/market-insights/rspo-certified-palm-kernel-diethanolamide-supply-gap

  2. USDA Oilseeds and Products Annual (Indonesia Production Forecast): https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Annual_Jakarta_Indonesia_ID2025-0015.pdf

  3. MPOB Official Statistics (October 2025 Palm Kernel Production): https://bepi.mpob.gov.my/index.php/monthly-release/330-monthly-release-2025/1218-october-2025