Malaysia faces pressure on palm oil exports amid Indonesia’s policy shift
Malaysia palm oil exports are expected to fall for a third straight month, declining 6.2% in May to 1.22 million tonnes, as more competitive Indonesian supplies and high importer inventories curb demand. Stocks rose 2.2%, though exports may recover in June amid renewed buying interest.
Malaysia’s palm oil exports could decline for a third consecutive month as rising competition from Indonesia weighs on shipments. The market is reacting to Indonesia’s ongoing overhaul of its export system, which is encouraging producers to accelerate shipments ahead of the full rollout of new regulations.
Since June 1, Indonesia has begun transitioning to a new export control framework under which the state-linked company PT Danantara Sumberdaya Indonesia is gradually taking over export management functions. Traders are expected to front-load shipments before the transition period is completed, which could last until early 2027.
Analysts note that the market had initially expected demand to shift in Malaysia’s favor, but this has not materialized. One key reason is that major importers, particularly India, had already built up substantial palm oil inventories in the first quarter. At the same time, Indonesian palm oil remains more price competitive, helping the country strengthen its position in the global market.
In May, Malaysia’s palm oil exports are estimated by market participants to have fallen 6.2% month-on-month to 1.22 million tonnes, the lowest level since February and a continuation of a downward trend following a 14% drop in April. Stocks rose 2.2% to 2.36 million tonnes, while crude palm oil production declined by nearly 5%. However, some analysts expect exports to recover as early as June, citing lower May prices and renewed buying interest from key importers, along with uncertainty over Indonesia’s evolving export policy.
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Source : Ukr Agro Consult
