MUMBAI/KUALA LUMPUR: Malaysia’s crude palm oil production is expected to surpass 20 million metric tons for the first time in 2025, supported by favourable weather, improved labour supply, and higher-yielding new plantations, trade and industry officials told Reuters.

The record output means the world’s second-largest producer of the tropical oil is likely to end the year with higher-than-expected stocks, weighing on benchmark Malaysian futures.

This year’s output is estimated to be 3.4% higher than last year’s 19.34 million tons and to surpass the previous record of 19.96 million tons set in 2015, according to estimates from a dozen trade and industry officials.

Production in November is expected to ease from record October levels, with a further decline likely in December, but output should remain above last year’s levels, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.

“Even with a drop in November and December, total production is still set to top 20 million tons,” he said.

In October, production rose 11.02% month-on-month to 2.04 million tons, its highest since August 2015, according to the Malaysian Palm Oil Board (MPOB).

The recent rise in production is largely due to favourable weather, which supported better fruit development and harvesting, as well as replanted younger palms that are yielding more fresh fruit bunches (FFB), MPOB’s director general Ahmad Parveez Ghulam Kadir said.

A gradual increase in harvesters and fruit collectors, following the approval of special labour quotas, has also helped estates optimise operations and reduce crop losses, Kadir said.

Major planters have cited similar factors in their recent financial results, with SD Guthrie Berhad crediting its FFB increase to favourable weather and enhanced labour efficiency, while Genting Plantations reported growth due to conducive weather conditions and better crop recovery.

Malaysia’s palm oil production typically declines in November and December. Over the past 25 years, November output has fallen an average of 6.8%, and December by 8.9%.

This year, November production could drop 9% from October to 1.86 million tons, followed by an 11% decline in December to 1.66 million tons, according to traders and industry officials.

Despite this seasonal dip, total output for 2025 is expected to exceed the milestone of 20 million tons, which industry players had not anticipated at the start of the year, said a Kuala Lumpur-based dealer with a trade house.

The MPOB has maintained its estimate for palm oil production at 19.5 million tons in 2025.

Source: The Star