KUALA LUMPUR, 19 March 2026 — Malaysia’s palm oil production declined seasonally to 1.28 million tonnes in February, down 18.5% (-293,000 tonnes) from January. The decline was mainly attributed to fewer harvesting days due to the shorter month and the Lunar New Year public holiday. 

Exports remained robust in February, accounting for 88% of Malaysia’s production and contributing to a lower stock level. This was despite a 22.5% month-on-month decline (-327,000 tonnes) to 1.12 million tonnes. Cumulative exports from January to February increased by 18.7% (+406,000 tonnes) to 2.58 million tonnes, with India contributing the largest share of the increase. 

Vegetable oil prices moved into an uptrend in March after a prolonged consolidation since mid-2025, supported by rising crude oil prices amid logistical disruptions in the Strait of Hormuz, as well as force majeure declarations by several major oil refineries in the Middle East. Among the major vegetable oils, palm oil has been the price leader, rising 10% since the outbreak of the conflict on 27 February. In comparison, rapeseed oil rose 4%, sunflower oil increased 3%, while soybean oil gained only 1% in the global market. 

The sharp rise in gasoil prices in the global market has improved the competitiveness of biodiesel usage and blending. Brazil’s biodiesel industry has called for an increase in the blending mandate from B15 to B16, while Indonesia is accelerating road tests for B50 blending to reduce import reliance, although the implementation timeline remains unclear. 

India’s palm oil imports recovered strongly in the first two months of 2026, rising by 965,000 tonnes or 149% to 1.6 million tonnes compared with the same period last year. Although soybean oil from South America was trading at price parity with palm oil in March, India is expected to continue favouring palm oil imports in March and April due to the steep increase in freight costs. Voyages from South America to India typically take 6-7 weeks, compared with only 7-10 days from Malaysia. 

High vegetable oil prices, coupled with an oversupply of oil meals and feed grains, have encouraged farmers to prioritise planting of sunflower seed and rapeseed, which have oil content of around 41%-43%. As a result, global sunflower seed and rapeseed production is projected to increase sharply, with combined output expected to rise by 6.8 million tonnes to 149 million tonnes in the 2026/27 marketing year. 

In view of this, sunflower oil prices may face downward pressure in the coming months, and the current sunflower oil price premium may not be sustainable if the projected production materialises. 

Looking ahead, palm oil prices are expected to remain above RM4,450 in the near term, supported by elevated energy prices and a favourable palm oil-gasoil (POGO) spread. However, weaker economic growth and heightened price volatility arising from uncertainties in the Middle East may temporarily delay imports from major markets, potentially capping the price rally.