Malaysian banks forecast a 1% increase in palm oil production in 2026

Two major Malaysian investment banks, RHB Research and MBSB Research, have confirmed a “neutral” view on the plantation sector, the industry expects growth within 1%, reports Business Today.

Despite the record production of palm oil in Malaysia (over 20 million tons in 2025), the market is restrained by sluggish exports and growing stocks, which have reached a maximum since 2019.

A new pressure factor was Indonesia’s decision to increase export duties to support its B40 biodiesel project and to refuse to increase the mandate to B50, which puts Indonesian producers of the tropical product in a less favorable position.

Data from the Malaysian Palm Oil Council show that the production of crude palm oil in 2025 reached a record 20.28 million tons, which was facilitated by an increase in the yield of fresh fruits to 17.77 tons per hectare and higher indicators of oil extraction.

The sown area increased by 1.6% year-on-year and amounted to 5.7 million hectares, which is due to initiatives to transplant trees on the territory of Peninsular Malaysia, Sabah and Sarawak.

However, exports fell by 9.7% to 15.26 million tons amid weaker demand from India, China and the EU, which led to the formation of ending stocks of 3.05 million tons, the highest level since February 2019.

Looking ahead, MBSB forecasts moderate production growth of 1.0% in 2026, while exports are forecast to remain low at 15.1 million tonnes due to continued weak demand, leading to steadily high ending stocks at 3.18 million tonnes.

Hourly price forecasts are about 4,200-4,250 ringgits per ton, with moderate growth expected in the second half of the year.

Tags: Malaysia, palm oil, crop forecast