Malaysia’s palm oil stocks to decline as production slows and exports rise

Malaysia’s palm oil stocks are expected to decrease in the coming months, reaching approximately 1.7 million metric tons by year-end, driven by a seasonal slowdown in production and rising exports due to festive season demand, according to the Malaysian Palm Oil Board (MPOB). As the world’s second-largest palm oil producer after Indonesia, this reduction in inventories could bolster benchmark futures, which have recently faced pressure from cheaper soyoil supplies.

Palm oil production in Malaysia typically declines toward the end of the year following a robust third quarter. In August, palm oil stocks rose 4.18% month-on-month to 2.2 million tons, the highest since December 2023, MPOB data showed. “Production is gradually slowing, and we anticipate exports to increase in the coming months due to festive season demand,” said Ahmad Parveez Ghulam Kadir, MPOB’s director-general, on Monday.

Palm oil prices have been under pressure recently due to a sharp drop in soyoil prices, making palm oil less competitive. This has prompted India, the top palm oil buyer, to increase soyoil purchases for the coming months. However, prices are likely to remain firm due to uncertainties surrounding Indonesian supplies, Kadir noted.

Indonesia’s exports could be impacted by the proposed B50 biodiesel program, which aims to increase palm oil content in biodiesel to 50% starting next year, and government seizures of oil palm plantations. Earlier this month, Indonesia transferred 674,178 hectares of palm oil plantations to state-owned Agrinas Palma Nusantara, bringing the company’s total land area to 1.5 million hectares.

In Malaysia, oil palm replanting is progressing slowly. To accelerate the process, MPOB has urged the government to increase funding to 280 million ringgit for 2026, up from 100 million ringgit this year, to enhance productivity and ensure stable palm oil production in the future.

Tags: Malaysia, palm oil, stocks