KUALA LUMPUR, 19 December 2025 — Malaysia’s palm oil production declined by 108,000 tonnes or 5.3% month-on-month to 1.93 million tonnes in November. Exports also fell short of expectations, reaching 1.21 million tonnes, largely due to weaker demand from Sub-Saharan Africa after the region imported nearly 600,000 tonnes in October, reducing import volumes in November. Demand from the EU27 also softened after the European Union confirmed a further 12-month delay in the implementation of the EUDR, removing the need for importers to build precautionary stocks.
The combination of strong production and weaker exports pushed Malaysian palm oil stocks to 2.83 million tonnes in November, the highest level since March 2019. Looking ahead to 2026, Malaysia’s palm oil exports are forecast to rise to 16.2 million tonnes, while production is expected to ease to 19.7 million tonnes as oil palm trees enter a resting phase following solid performance in 2025.
Sentiment across the vegetable oil market has been weighed down by falling crude oil prices, which dropped to USD55 per barrel in December 2025, the lowest level since February 2021. In the United States, soybean oil prices fell to a five-month low of USD1,130 per tonne, as the US Environmental Protection Agency (EPA) expects President Trump’s 2026 biofuel policy which prioritizes the use of domestically produced soybean oil to be finalized only in the first quarter of 2026.
Palm oil prices were also weighed down by the softer global sentiment, compounded by rising inventories in Malaysia. As a result, palm oil’s price competitiveness has further improved relative to soybean oil and other competing vegetable oils, which is expected to translate into a pickup in global palm oil demand in the near term.
In India, palm oil was trading at a discount of USD105 per tonne to soybean oil and USD240 per tonne to sunflower oil as of mid-December. As a result, India’s palm oil imports are expected to improve notably between January and March, supported by the seasonally higher demand during India’s wedding season.
In China’s domestic market, palm olein has also become significantly more competitive, with its premium over soybean oil narrowed sharply from USD195 per tonne in the first quarter of 2025 to just USD20 per tonne in December. As such, the recent weakness in palm oil prices is likely to be temporary and may present an attractive opportunity for key destination markets to rebuild inventories.
Palm oil stocks in Malaysia remain elevated, rising by around one million tonnes compared with a year earlier. In contrast, Indonesia’s stocks are expected to contract by year-end. Indonesia’s palm oil exports in 2025 are projected at 26.5 million tonnes, while domestic consumption is estimated at about 23 million tonnes, comprising around 10 million tonnes for food use and 13 million tonnes for biodiesel. Combined exports and domestic usage of about 49.5 million tonnes are broadly in line with estimated production of 49 million tonnes, implying a minor deficit in stocks. Collectively, the contrasting stock positions in Malaysia and Indonesia suggest there is no concern of oversupply.
Global soybean production is projected to stagnate at 424 million tonnes in 2026. Even so, ample soybean supplies are expected to continue weighing on market sentiment, as oilseed availability remains abundant. US soybean exports in the new marketing season declined by 46% between September and November due to the absence of Chinese demand. Concerns are also mounting that the harvest of new South American soybean supplies from March onwards will further pressure US export prospects and prices.
Looking ahead, palm oil prices in January are expected to remain range-bound between RM3,800 and RM4,100, underpinned by a balanced supply-demand outlook. The first quarter is typically the seasonal low for production, while demand is expected to improve ahead of the Lunar New Year and Ramadan, supporting a drawdown in stocks. However, spillover weakness from the energy market, coupled with abundance oilseed supplies is likely to cap any sustained price recovery, keeping prices within a narrow trading range.
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About 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, MPOC champions the Malaysian Sustainable Palm Oil (MSPO) certification as a benchmark for ethical and responsible production. 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 RM109 billion in export earnings in 2024, accounting for 24% of global production and 32% of exports. MPOC remains committed to driving sustainable growth and global leadership in the palm oil sector.
