KUALA LUMPUR, 22 Sept 2026 — Malaysia’s palm oil production rose marginally by 1.4% month-on-month to 1.81 million tonnes in August 2026, supported by higher fresh fruit bunch (FFB) collection and an improvement in the oil extraction rate (OER) from July. Nonetheless, output remained below the level recorded a year earlier, marking the sixth consecutive month of year-on-year decline since March 2026.
Cumulative palm oil exports from January to August 2026 rose by 806,000 tonnes to 10.4 million tonnes. However, exports fell 7.5% month-on-month in August to 1.29 million tonnes, weighed by weaker shipments to South Asia and the Middle East. Despite the monthly decline, full-year exports are projected to reach 16.0 million tonnes, 5.2% higher than the volume recorded in 2025.
The combination of higher production and weaker exports lifted palm oil stocks to 2.82 million tonnes in August. Production and stock levels in both Malaysia and Indonesia are expected to ease in the coming months.
Global vegetable oils recorded a mixed performance in September. Malaysian palm oil prices led the gains, rising 3.5% during the month, followed by Argentine soybean oil at 3.3%. Meanwhile, Argentine sunflower oil prices fell 6.1%, while European rapeseed oil declined marginally by 0.4%. The sharp decline in sunflower oil prices was mainly driven by increasing supply pressure as Ukraine and Russia entered their sunflower seed harvesting season in September.
Dry weather associated with El Nino has become more pronounced across Malaysia and Indonesia since early August, raising concerns over its potential impact on palm oil production 6 to 9 months later. Rainfall in Indonesia was around 20% below average in July and 60% below average in August, while Malaysia also experienced drier conditions, with rainfall around 30% below average in August.
Indonesia’s palm oil production is forecast to decline by 1.9 million tonnes in 2027, while Malaysia’s production is forecast to fall by 0.7 million tonnes, according to Oil World. Indonesia’s exports are also projected to decline by almost 3 million tonnes in 2027, reflecting firmer domestic demand from biodiesel blending and a weaker production outlook.
In Malaysia, exports are projected to remain stable at around 16 million tonnes in 2027. As a result, Malaysia is expected to play an increasingly important role in supplying palm oil to global consumers. The current high stock level is therefore likely to be temporary.
Global production of the four major vegetable oils is projected to increase by 3.1 million tonnes next year, while consumption is expected to rise by 6.1 million tonnes, significantly outpacing production growth.
The supply shortfall is mainly due to a projected decline in palm oil output in Southeast Asia, while higher palm oil production in Latin America is unlikely to fully offset the decline. Nonetheless, weather developments in October and November will be critical in determining the eventual impact on 2027 output.
Energy market disruptions intensified following the shutdown of Saudi Arabia’s East-West pipeline facilities after escalation in the conflict. This added to existing supply concerns from shipping interruptions in the Strait of Hormuz and the Bab al-Mandab Strait. As a result, biofuel blending margins have improved further. Gasoil prices were up 147% year-to-date by mid-September, while crude oil prices rose by 73%, well above the 21% increase in CPO prices over the same period. Indonesia’s domestic crude palm oil prices were trading around USD600/MT below ICE gasoil prices in September.
Looking ahead, crude palm oil prices are expected to remain firm above RM4,700 per tonne in October and likely throughout the rest of the year, underpinned by weather uncertainty and favourable energy markets. The main downside risks are an easing in energy prices and further stock accumulation, as palm oil production typically reaches its seasonal peak in September or October.
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.