Crude palm oil prices fall 3.5% amid record inventories in Malaysia

The global crude palm oil (CPO) market came under pressure in October 2026 from record inventories and strong production in Malaysia, despite recovering export demand. According to OCBC Bank, average CPO prices declined by 3.5% during the month to RM4,439/ton, compared with RM4,601/ton in September. Prices stood at RM4,449/ton on October 30. Analysts expect prices to remain relatively stable in the near term, as substantial inventories continue to limit the potential for gains.

Malaysia’s palm oil production increased by 15% year on year in September to a record 2.1 mln tons, while output for January–September reached 14.7 mln tons, up 1.9% from the previous year. Meanwhile, monthly export shipments declined by 12.1%, pushing total palm oil inventories up 24.5% to a record 3.5 mln tons. In Sarawak, which accounts for more than 20% of the country’s production, storage tanks were approaching full capacity. Production remained elevated in October, adding further pressure to the market.

At the same time, demand for Malaysian palm oil recovered significantly in October. According to Intertek estimates, exports during October 1–25 surged by 46.9% compared with the same period in September. One of the main drivers was India’s decision to reduce edible oil import duties in September. Following the tariff adjustment, Indian refiners purchased more than 200 thsd tons of crude palm oil in just one week ahead of the festive season. However, even this improvement in demand has not yet been sufficient to significantly reduce accumulated inventories. Malaysia is also considering a temporary waiver of CPO export duties to encourage overseas shipments, although no decision has been announced.

Growing domestic palm oil consumption in Indonesia is providing additional support to the global market. During January–August 2026, consumption increased by 6.8% to 17.5 mln tons, of which approximately 9.2 mln tons were used for biodiesel production. Meanwhile, prolonged drought in West Kalimantan has lowered river levels, disrupting palm oil transportation and deliveries of fresh fruit bunches to processing facilities. Haze from forest fires could also negatively affect oil palm pollinating insects, creating potential yield risks in 2027.

According to OCBC, record inventories in Malaysia will remain the main factor limiting crude palm oil price gains in the coming months. Export demand may weaken after India’s festive restocking ends, while a seasonal decline in production is expected to begin in November. However, market conditions could change in 2027 due to potential production losses in Indonesia, weather-related risks and persistently strong demand for biodiesel feedstock. Together, these factors could contribute to a gradual reduction in global inventories and a recovery in CPO prices.

Tags: Crude palm oil, Malaysia