Nigeria is facing higher costs for importing palm oil as global prices continue to rise due to supply problems in Indonesia, the world’s largest producer.
Crude Palm Oil (CPO) prices on the Bursa Malaysia Derivatives Exchange are currently trading between $1,135 and $1,160 per metric ton.
This increase is affecting countries like Nigeria, which depends on imports to meet its supply gap of over 500,000 metric tons each year.
Indonesia plans to increase its palm oil biodiesel blend to 50% (B50) in 2026. The country is also maintaining higher export taxes to support its domestic fuel needs.
These policies reduce the amount of palm oil available for export, pushing global prices higher and increasing costs for importers like Nigeria.
Palm oil prices are also linked to crude oil prices because palm oil is used in biodiesel production. With crude oil around $120 per barrel, palm oil prices are expected to remain high.
Weather conditions are also affecting supply.
A strong dry season and El Niño effects are expected to reduce Indonesia’s output by up to one million tons in 2026.
At the same time, countries like Malaysia and Indonesia are increasing local biodiesel usage, which further limits exports.
Nigeria consumes over 2.5 million metric tons of palm oil yearly but produces only about 1.4 million metric tons.
This shortfall forces the country to import large quantities, costing about $500 million to $600 million annually.
The gap also contributes to food inflation, as palm oil is widely used in households.
Nigeria used to be a major global producer of palm oil in the 1960s, supplying over 40% of the world market. However, production has declined significantly over the years.
Some local companies are expanding production. For example, Presco Plc has increased its plantation size and milling capacity, while Okomu Oil has reported strong profits from palm oil sales.
Experts say Nigeria needs to increase local production, improve farming systems, and reduce dependence on imports if it wants to reduce costs and regain its position in the global palm oil market.