Malaysia: Rising Palm Oil Yield Signals Start Of Seasonal Supply Uptrend

MPOB’s March 2025 production of palm oil in Malaysia rose month-on-month (MoM) to 1.387 million metric tons (MT), but remained flat year-on-year (YoY), according to a Kenanga Research report. This figure aligns with both Kenanga’s and the broader market’s expectations, signaling the start of the seasonal supply uptrend, with increased Fresh Fruit Bunch (FFB) harvests anticipated from March through September or October.

However, the report notes that exports reached a decade-low of 1.006 million MT for March. Consequently, closing inventory increased by 3% MoM to 1.563 million MT, although it was down 9% YoY and 16% below the 10-year average. The closing inventory was also 7% higher than Kenanga’s forecast but within consensus estimates.

Despite these fluctuations in production and exports, March’s Crude Palm Oil (CPO) prices held steady at RM4,740 per MT, showing a slight decrease of 0.4% MoM but a significant increase of 12% YoY. Overall, 1QCY25 production, exports, and closing inventory were lower than usual, contributing to the strong quarterly price of RM4,724 per MT, a level last seen in 1QCY22 due to the surge in edible oil prices at the onset of the Ukraine conflict.

Kenanga Research maintains an “OVERWEIGHT” rating for the plantation sector, citing its defensive qualities. While palm oil prices are expected to ease with the seasonal supply increase, CY25-26 prices are projected to remain firm at RM4,200 and RM4,000 per MT, respectively. The report suggests an increasing likelihood of an edible oil supply deficit in CY25, potentially persisting into CY26, which supports the positive outlook for the sector.

Tags: Malaysia, palm oil, inventory, exports, price, Crude palm oil, Production