India's Palm Oil Surge: A Catalyst for Agribusiness Profits and Strategic Equity Plays

The Indian palm oil market is undergoing a dramatic transformation. After a period of stagnation, April 2025 marked a turning point, with imports surging by 13.7% month-on-month to 424,599 metric tons. By May, volumes skyrocketed to 600,000 metric tons, a record high since November 2024, driven by collapsing global prices and policy shifts. This surge isn't just a temporary blip—it's a structural shift with profound implications for agribusiness and equity investors. Let's dissect the opportunities and risks in this booming sector.

The Surge: Drivers and Data

Key Catalysts:
1. Price Competitiveness: Palm oil's FOB price in Malaysia fell to $995/ton by mid-April 2025, making it $50 cheaper per ton than soybean oil. This price gap has incentivized Indian refiners to pivot from costlier alternatives like sunflower and soybean oils.
2. Policy Support: India slashed the basic import tax on crude palm oil (CPO) to 10% (from 20%), reducing the total duty (including cess) to 16.5%. This move creates a 19.25% duty differential with refined oils, favoring domestic refining of imported CPO.
3. Low Domestic Stocks: India's edible oil inventories hit a five-year low of 1.35 million tons by May 2025, forcing refiners to restock aggressively.

Beneficiaries: Top Players in the Palm Oil Supply Chain

1. Producers: Indonesia and Malaysia Dominate

• Wilmar International (W21.SI): The Singapore-based agribusiness giant controls 30% of global palm oil refining capacity. Its Q3 2023 net profit surged 15% due to trading margins, a trend likely to accelerate as Indian demand grows. Wilmar's integrated supply chain—from plantations to refining—positions it as a buy at current valuations.
• IOI Corporation (1906.KL): Malaysia's largest palm oil producer and refiner, IOI benefits from India's preference for Malaysian CPO. With a 25% cost advantage over smaller rivals, it's a top pick for long-term investors.
• Indonesian Giants: Musim Mas and Sinar Mas, though less accessible to foreign investors, are critical suppliers. Their low-cost operations make them beneficiaries of the India demand boom.

2. Traders and Refiners: India's Domestic Champions

• Solvent Extractors' Association of India (SEA): Represents refiners like Godrej Agrovet and Bharat Oils, which stand to gain from the duty shift. SEA estimates monthly imports could hit 850,000 tons by July 2025, boosting refining margins.
• Global Traders: Firms like Cargill and Wilmar dominate global trade flows. Sandeep Bajoria of Sunvin Group forecasts imports of 750,000 tons in June, underscoring their trading opportunities.

Risks and Considerations

• Environmental Scrutiny: Palm oil's link to deforestation could trigger EU import bans or ESG-driven investor outflows.
• Geopolitical Volatility: U.S. tariffs on Malaysian palm oil and Russia-Ukraine tensions (affecting sunflower oil supplies) could disrupt trade flows.
• Weather Risks: Droughts in Indonesia/Malaysia or pest outbreaks could curb production, spiking prices and slowing demand.

Investment Strategy: Play the Surge

Equity Picks:
- Wilmar International (W21.SI): Buy at $5.40/share, targeting a $7.50 price target by end-2025.
- IOI Corporation (1906.KL): Accumulate below RM12/share, with upside to RM16 on India demand.
- Indian Refiners: Look for stocks with refining capacity exposure, like Godrej Agrovet, which could see EBITDA margins expand from 8% to 12% by 2026.

Commodity Play:
- Palm Oil Futures (BMD): The May 2025 rebound to $1,050/ton is just the start. With India's restocking needs and low global inventories, prices could hit $1,200/ton by Q4 2025.

Conclusion: A Golden Opportunity in Agribusiness

India's palm oil surge isn't just a blip—it's a structural shift driven by policy, prices, and pent-up demand. Investors ignoring this trend risk missing out on a multi-year boom in agribusiness equities. Act now:
- Buy Wilmar and IOI for exposure to upstream production.
- Back Indian refiners to profit from domestic processing margins.
- Hedge with palm oil futures to capitalize on rising global prices.

The clock is ticking. The palm oil supply chain is primed for outsized returns—don't let this opportunity slip away.

Data sources: Platts, Solvent Extractors' Association of India (SEA), Sunvin Group.