KUALA LUMPUR, 19 June 2026 — Malaysia’s palm oil production declined by 6.9% month-on-month to 1.51 million tonnes in May. The decline was partly due to oil palm trees temporarily entering a resting phase following higher than usual production between October 2025 and March 2026. In addition, May had two days of public holidays compared with none in April, resulting in fewer harvesting days.
Meanwhile, the drop in exports in May was largely anticipated, as slower purchasing activity in March and April amid heightened price volatility was expected to translate into lower shipments in May and June.
Despite the monthly decline, cumulative exports from January to May 2026 increased by 783,000 tonnes or 13.8%. The largest increases were recorded in exports to India, Kenya and Vietnam, which collectively rose by 749,000 tonnes.
The Sub-Saharan Africa and ASEAN regions continue to emerge as important growth markets for Malaysian palm oil. In the first five months of 2026, these two regions accounted for 36% of Malaysia’s total palm oil exports, compared with 25% five years ago in 2022.
In 1H 2026, US soybean oil and rapeseed oil led the vegetable oil complex, rising by 59% and 16% year-to-date respectively. The rally was driven by the US biofuel mandate and restrictions under the 45Z biofuel tax credits, which favour North American feedstocks. By comparison, prices of South American soybean oil, sunflower oil and Malaysian palm oil rose modestly by 8% to 10%.
The unusually high premium of US soybean oil since March 2026 has sharply reduced its export competitiveness. US soybean oil exports fell to just 11,000 tonnes in May 2026, the lowest level in 19 months. Exports are expected to remain subdued if the premium persists, leaving global importers increasingly dependent on South American supplies.
As of mid-June, US soybean oil was trading at a premium of USD580 per tonne over Argentine soybean oil. At the same time, Indonesia’s exportable palm oil supply is expected to tighten from late Q3 into Q4, with B50 policy taking effect in July 2026 alongside stagnant production and higher front-loaded demand. Oil World projects Indonesia’s palm oil production to remain broadly unchanged at 49.4 million tonnes in 2026, while exports and domestic consumption in the first four months of 2026 increased by a combined 2.2 million tonnes (+15%).
This may encourage global importers to shift part of their sourcing towards Malaysia for greater supply stability. Elevated fertilizer costs following the US-Iran conflict may also discourage fertilizer application among smallholders in Malaysia and Indonesia. The impact of lower fertilizer usage will only become evident with a time lag.
However, vegetable oil stocks in major importing markets have risen sharply, driven by weaker near-term consumption amid inflationary pressures. India’s vegetable oil stocks reached a 17-month high of 2.2 million tonnes in May, while China’s vegetable oil stocks climbed to nearly 2.0 million tonnes, the highest level in 2026. Elevated stocks in both markets could temporarily slow import demand in the near term.
Looking ahead, crude palm oil prices are expected to trade between RM4,400 and RM4,650 per tonne in July, supported by the tightening supply outlook in Indonesia and rising El Nino risk. Although oil palm plantations in Malaysia and Indonesia have yet to be affected as of June, the likelihood of a stronger El Nino emerging from July or August is increasing.
A strong El Nino could reduce rainfall and bring drier conditions across Southeast Asia, Australia and India, although the impact on palm oil yields and production would only become evident after a lag of 9 to 12 months.
Nevertheless, price gains may be capped by elevated vegetable oil inventories in key importing markets. Biodiesel economics have also become less supportive, as gasoil prices have fallen below palm oil prices in the futures market.
For all media enquiries, please contact:
Kartigha Ayamanny, Assistant Manager, Sustainability, Promotions and Communication
Email: kartigha@mpoc.org.my
The Malaysian Palm Oil Council (MPOC)
The Malaysian Palm Oil Council (MPOC) is dedicated to promoting the global market expansion of Malaysian palm oil and its derivatives by enhancing its image and acceptance through technological innovation, economic value, and environmental sustainability, with a vision to position Malaysia as the world leader in certified sustainable palm oil. Through a strategic network of international offices in key markets – including China, India, the Middle East, Africa, and ASEAN – MPOC actively engages stakeholders, opens new market opportunities, and strengthens the global presence of Malaysian palm oil. As a cornerstone of Malaysia’s economy, the palm oil industry contributed RM 112.5 billion in export earnings in 2025. MPOC remains committed to driving sustainable growth and global leadership in the palm oil sector.
