The prices of palm kernel oil have seen a small increase during the fourth week of December 2025. The previous drop in the prices of palm kernel oil was due to adequate levels of supply in the market, as well as weak demand from the downstream industries as buyers mainly held back purchases due to high costs. However, toward the end of the month, there was some improvement in the market due to the stabilization of the prices of the entire vegetable oil segment, including crude palm oils. An added push came from the international supply-side forces of seasonal production cycles in major production areas, along with the biodiesel mandate, which sustained palm-based raw material exports. Logistics associated with the holiday season have also worked to hamper the immediate availability of supplies, leading to sellers’ reluctance to lower their prices. Turning to the demand side, a selective restocking of condiments before the end of the year has helped sustain a mild price increase.
Basis the global market trends observed in the United States during the fourth week of December 2025, it was seen that the market performance of palm kernel oil experienced a minor recovery from the extensive decline that was observed over the past few weeks. The market showed some improvement owing to the overall developments across the vegetable oil market. Market participants largely viewed the rebound as a stability phase rather than a sharp reversal, signaling that prices may have reached a temporary floor after prolonged weakness with values rising by around 0.6%.
The initial decrease in the prices of palm kernel oil was triggered by factors such as abundant supplies within the global market, low buying demand from the subsequent industries, and a conservative buying approach by the consumers considering expected subsequent price corrections. For the latter part of December, the consumers of palm kernel oil in the food, oleochemical, and personal care segments of industries utilized a low buying approach, leading to abundance in the spot market and favorable prices. Moreover, weak benchmarks in the international markets and currency fluctuations contributed to the pressures experienced by palm kernel oil prices in the key import segments.
However, towards the latter half of the month, underlying dynamics in the global markets started to provide support. One of the key reasons for the slight support that emerged was the tightening sentiment prevailing in the broader vegetable oils sector. Crude palm oil prices appeared to be exhibiting early indications of consolidation, following the decrease, which helped to provide stability in the cost of feedstock to produce palm kernel oil. Since palm oil derivatives are closely linked, any kind of support that emerges in the upstream market helps to provide support to palm kernel oil prices as well.
There are also some global supply-side elements that have influenced the market. For example, major palm kernel oil-producing countries in Southeast Asia have witnessed seasonal changes in their productions. As a result, the annual growth in the supply of palm kernel oil was dampened during the end of the year. However, the requirement for biodiesel in major palm oil-producing countries has absorbed considerable amounts of palm products. In the process, the surplus of palm kernel oil available for export was dampened.
Other logistical factors also affected the recovery. Seasonally reduced ship schedules, port work, and ship times affected the readily available palm kernel oil in some importing countries. For the moment, these conditions contributed to suppliers retaining palm kernel oil offers unchanged or increasing them slightly. Suppliers showed less willingness to reduce the price further, which helps maintain the price stability because they synchronized the offers with the replacement cost.
On the demand side, selective restocking ahead of the New Year provided incremental support. Buyers who had delayed purchases of palm kernel oil earlier due to high prices started meeting some of their short-term needs as stocks depleted. Although overall demand was tempered, the pickup in palm kernel oil purchasing was enough to help quotes edge higher in an excessively oversold market.
However, this recovery has not made market participants complacent about prices. This is mainly attributed to the fact that demand growth has failed to exhibit any strong momentum, and this recovery is therefore regarded as a corrective movement and not a defining one. The major buyers in this sector still focus on cost effectiveness and therefore have flexible procurement strategies for palm kernel oil.
Moving forward, it appears that prices of palm kernel oil will remain within the same ranges in the short-term depending on future market dynamics post-holiday periods and developments in the global markets of vegetable oils. Although the fourth week rise in December 2025 has eased the market mood surrounding palm kernel oil, further rallies in palm kernel oil prices seem to require stronger indicators of global consumption trends in the coming months.
