The PFAD market narrative for September 2025 is being written at the source, with the availability of its raw material, Crude Palm Oil, becoming the defining chapter. A challenging scenario is unfolding for refiners as a dual deficit in both the quantity and quality of CPO is directly constricting PFAD output and sending clear bullish signals across the supply chain.

Navigating this complex landscape requires more than just data; it demands a partner with deep market access. At Tradeasia International, we believe that understanding the raw material's heartbeat is the key to unlocking stable palm and oleochemical supply chains, turning volatility into opportunity for our clients.

A Tale of Two Deficits: Quantity and Quality

The current market tightness stems from two interconnected issues. Firstly, the sheer volume of CPO is under pressure. Mid-month data from the Malaysian Palm Oil Board indicates that production is tracking towards 1.72 million tons, falling short of the 1.75 million ton forecast. This immediate deficit limits refinery throughput. Secondly, and more critically, is the unexpected quality of this raw material. The average Free Fatty Acid (FFA) content has been recorded at a low 3.9%, a significant dip from the typical Q3 average of 4.5%. This seemingly positive attribute for edible oil has a costly downside for by-products, as a lower FFA level directly reduces the PFAD yield per ton of refined CPO from an expected 4% to just 3.5%. This subtle shift effectively erases over 25,000 tons of potential PFAD from the market this month.

The Inevitable Price Reaction

The market has priced in these supply-side shocks with swift precision. According to pricing data from Palm-Chemicals.com, PFAD values have climbed 4.2% since late August to a firm $790/MT. This is a direct pass-through from the raw material’s rising cost, as CPO futures on the Bursa Malaysia Derivatives have rallied by MYR 250 to MYR 4,120. With CPO inventories now projected to dip below the critical 2.0 million ton mark, the forward-looking sentiment remains firm. Any further downward revisions to CPO production will continue to squeeze the raw material base, likely testing the $810/MT resistance for PFAD in the coming weeks.

Sources:

  1. PFAD Oleochemical Prices & Data - Palm-Chemicals.com

  2. Malaysia Palm Oil Statistics - Malaysian Palm Oil Board

  3. Palm Oil Futures Market Data - Bloomberg