Rising Pressures from Supply and Policy Changes

The refined, bleached, and deodorized (RBD) palm oil market is currently experiencing significant adjustments as global supply and demand continue to shift. In August 2025, market updates highlight a tightening supply from Southeast Asia alongside surging demand from major importers, creating ripple effects on oleochemical raw materials and pricing trends.

In Malaysia, Crude Palm Oil (CPO) prices averaged RM4,216 per tonne in early August, a slight increase from the previous week. This movement translated into higher RBD Palm Olein prices, which rose to around US$1,036 per metric ton, underscoring strong demand from countries like India, China, and Europe. Indonesia, the world’s largest palm oil producer, raised its August CPO reference price to $872.27 per ton, resulting in higher export taxes. These measures were designed to stabilize domestic supply while capturing more value from the global market. At the same time, biodiesel exports were kept duty-free to safeguard domestic industry competitiveness, further complicating trade flows.

Weather has also added volatility to the equation. Intermittent monsoon conditions in Malaysia and Indonesia have slightly affected harvest volumes, leading to short-term production slowdowns. With these two nations together accounting for the bulk of global palm oil supply, even minor disruptions create noticeable upward pressure on prices. Meanwhile, both governments are using policy tools such as export tax adjustments and regulatory measures to balance local consumption needs with global export commitments, making the market more unpredictable for international buyers.

Impact on Downstream Industries and What Lies Ahead

These supply and policy dynamics are proving critical for industries heavily reliant on oleochemical raw materials. For the personal care sector, the higher costs of RBD palm olein are squeezing formulation budgets, particularly for ingredients such as surfactants and emollients. The food processing industry, where palm oil is essential for frying oils and shortenings, is also grappling with tighter profit margins as input prices climb. Surfactant producers, who depend heavily on palm derivatives for detergents and cleaning agents, are being forced to adapt their strategies to keep up with these shifts.

Despite these challenges, the global palm oil market is expected to maintain long-term growth. Projections show the market reaching USD 71.38 billion in 2025, with a compounded annual growth rate of 5.7% through 2032. Conventional palm oil still dominates, making up 95.5% of total production, thanks to its lower costs and established efficiencies compared to organic alternatives.

Looking ahead, several factors remain crucial for market participants to watch closely. Weather patterns across Southeast Asia during the ongoing monsoon season will play a decisive role in shaping output and exports. Indonesia’s export policy adjustments, particularly regarding CPO and RBD products, could alter global supply availability and pricing structures. Import demand trends from India and China also remain pivotal, given their substantial influence on trade flows. Additionally, the gradual shift toward sustainable palm oil and increasing regulatory scrutiny will continue reshaping sourcing strategies and supply chains.

For businesses and traders alike, agility and vigilance will be key to navigating this evolving environment. RBD palm oil remains a cornerstone in oleochemical supply, and its price movements and availability will keep steering downstream industries well into the future. The developments of August 2025 provide a clear reminder that policy, environment, and consumer demand are more interconnected than ever in determining the trajectory of this essential commodity.