Malaysian banks forecast palm oil production to grow by 1% in 2026
Despite record Malaysian palm oil output of 20.28 million tonnes in 2025, exports fell 9.7%, pushing stocks to 3.05 million tonnes, the highest since 2019. Moderate 2026 growth of 1% is expected, with exports remaining weak, ending stocks at 3.18 million tonnes, and prices around RM4,200–4,250 per tonne.
Despite record palm oil production in Malaysia (over 20 million tonnes in 2025), the market is constrained by sluggish exports and rising stockpiles, which have reached their highest level since 2019.
Adding to the pressure is Indonesia’s decision to raise export duties to support its B40 biodiesel project and abandon its plan to increase the mandate to B50, putting Indonesian producers of the tropical product at a disadvantage.
Data from the Malaysian Palm Oil Council shows that crude palm oil production in 2025 is expected to reach a record 20.28 million tonnes, driven by higher fresh fruit yields of 17.77 tonnes per hectare and higher oil recovery rates.
The planted area increased by 1.6% year-on-year to 5.7 million hectares, driven by tree replanting initiatives in Peninsular Malaysia, Sabah and Sarawak.
However, exports fell 9.7% to 15.26 million tonnes amid weakening demand from India, China and the EU, leading to ending stocks of 3.05 million tonnes, the highest since February 2019.
Looking ahead, MBSB forecasts moderate production growth of 1.0% in 2026, with exports forecast to remain low at 15.1 million tonnes due to continued weak demand, leading to persistently high ending stocks of 3.18 million tonnes.
Price forecasts for the year are around RM4,200-RM4,250 per tonne, with moderate growth expected in the second half of the year.
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Source : Ukr Agro Consult
