Okomu and Presco Set for Profit Boost Amid Nigeria’s Palm Oil Supply Crunch

Palm oil prices are expected to rise as Indonesia, the world’s top producer, expands its biofuel program — a move that could tighten global supplies and offer opportunities for Nigeria’s palm oil industry.

Indonesia’s decision to raise its biodiesel blend mandate from 40% to 50% by the second half of next year — under the B50 program — is aimed at reducing fuel import costs and cutting carbon emissions. However, this policy is likely to divert more palm oil to domestic use, leaving less available for export and potentially driving prices higher worldwide.

Currently priced at $999.61 per ton, palm oil has fallen 6% year-to-date amid fluctuating demand and growing inventories. Yet, with limited production growth among major producers, analysts expect a bullish turnaround as biofuel demand surges.

Palm oil, which makes up about 38% of global vegetable oil production, is used in everything from snacks and margarine to cosmetics, detergents, and biofuels. Its versatility makes it a key driver of both food and energy markets — and a potential source of food inflation if supply tightens further.

Nigeria’s Position: Strong Demand, Supply Gaps

Nigeria remains Africa’s top palm oil producer but continues to face a significant supply shortfall. The nation imports nearly half of its annual consumption, estimated at 1.8 to 2 million metric tons.

During the 2022–2023 crop year, local consumption reached 1.8 million tons, while production rose to 1.4 million tons in 2023. Demand remains robust across industrial, food processing, and household sectors. Prices have surged by 101.3% in 2024, reaching a record ₦2,473,500 per ton in December, driven by inflation, forex volatility, and supply constraints.

Edo State Leads Palm Oil Expansion

Edo State, Nigeria’s palm oil hub, has allocated over 70,000 hectares for cultivation and attracted $500 million in investments — the largest in sub-Saharan Africa. Key industry players, including Presco, Okomu Oil, Dufil Prima Foods (makers of Indomie), and Flour Mills of Nigeria, are investing heavily to build a sustainable and integrated value chain.

• Okomu Oil Palm Plc reported a net profit of ₦60.3 billion in the first nine months of 2025, up 50% from its full-year 2024 results, on revenue of ₦174 billion (up 63%). The company plans a final dividend of ₦44 per share, bringing total dividends to ₦84, over three times higher than 2024 levels. Its share price has climbed 130% to ₦1,020 this year.

• Presco Plc has seen its after-tax profit soar by 4,088.7% in 2024 compared to 2015 levels, leveraging Edo’s fertile lands and export potential.

Meanwhile, Ellah Lakes aims to capture 2% of Nigeria’s annual palm oil market, valued at over ₦3 trillion, through a ₦155 billion investment in oil palm plantations, ₦45 billion in a cassava flour plant, and further expansion into pig farming and processing.

Expanding National Strategy

In Akwa Ibom State, Governor Umo Eno announced a ₦31 billion ($20.2 million) investment aligned with the National Palm Oil Development Strategy spearheaded by the Oil Palm Growers Association of Nigeria (OPGAN). Starting in 2026, the initiative will focus on expanding cultivation and supporting smallholder farmers.

Outlook: High Demand Meets Tight Supply

Palm oil’s high yield — producing up to 10 times more oil per hectare than alternatives like soybean or sunflower — keeps it economically attractive but also raises sustainability concerns.

As of November 2025, tighter biofuel regulations are constraining supply, even as global demand grows due to population increases and rising processed food consumption. Analysts predict that this imbalance could sustain elevated palm oil prices into 2026, creating both challenges and opportunities for producers like Nigeria.