USDA sees Malaysian palm oil output falling to 19.7 mln tons

Malaysia’s palm oil production could decline to 19.7 mln tons in 2026/27 from a revised 20.2 mln tons a year earlier. USDA links the decline to lower expected yields amid potential El Niño-related weather impacts.

Oil palm planted area is forecast to remain broadly unchanged at 5.16 mln ha. However, average yields could fall from 3.92 to 3.82 t/ha. USDA noted that a strengthening El Niño toward the end of 2026 poses additional downside risks to yields in 2027.

In the early stages, lower rainfall could even support production during the monsoon season by reducing flooding. However, prolonged dry conditions could later weigh on yields toward the end of 2026/27.

Domestic palm oil consumption is forecast at 4.59 mln tons, including 3.53 mln tons for industrial use. Demand will be supported by the full-year implementation of the B15 biodiesel mandate. At the same time, the import forecast was raised to 600 thsd tons as Malaysia continues to supplement domestic supplies for its expanding refining and downstream processing industry amid lower production.

USDA left Malaysia’s palm oil export forecast unchanged at 15.9 mln tons. Ending stocks were revised down to 2.49 mln tons from 2.56 mln tons previously, reflecting lower carry-in stocks and stronger competition between exports and domestic industrial demand.

Tags: Malaysia, palm oil