The fierce competition between palm oil and soybean oil in the global market is expected to peak again, thus creating uncertainty in the price of cooking oil in the local market in the near future.
This situation is caused by the trade war between the United States (US) and China, which is now beginning to affect the supply chain of vegetable oils at the global level.
According to a research report by RHB Research, China's refusal to purchase US soybeans has caused the United States to face an excess stock of commodities.
The situation is expected to put pressure on the price of soybeans and its derivatives, including soybean oil (SBO) in the international market.
The decline in SBO prices has also affected the position of crude palm oil (CPO) as the vegetable oil of choice, with the price difference between the two declining by 55% in the past three weeks.
RHB Research analysts stressed that the continued decline in SBO prices has the potential to trigger the risk of 'demand destruction' for palm oil.
A similar phenomenon also occurred in early 2025 when India, as one of the world's top importers, began prioritizing purchases of SBO over CPO.
India's move caused palm oil imports to fall by 18% until August 2025, with the risk of demand shifting back to overshadowing the market when CPO prices were between RM4,400 and RM4,500 per tonne.
Despite the pressure, CPO prices are expected to be supported by Indonesia's commitment to continue the B50 biodiesel mandate in 2026, according to RHB Research.
The B50 program, which adds palm oil blends to diesel fuel, is estimated to create an additional demand of 2.65 million tonnes in Indonesia, helping to absorb some of the supply in the market.
