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Kuala Lumpur, Oktober 5, 2026 – Malaysia’s palm oil industry is grappling with a historic supply glut after stockpiles ballooned to an unprecedented 3.45 million tonnes in September 2026.
The surge, driven by strong production and weaker exports, has rattled global edible oil markets and placed downward pressure on prices.
According to data from the Malaysian Palm Oil Board, inventories rose 22 percent from the previous month, surpassing the earlier record of 3.22 million tonnes set in December 2018.
Production climbed 16 percent to 2.11 million tonnes, the highest ever for September, supported by favorable weather conditions and improved labor availability across plantations.
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Exports, however, fell sharply by 12 percent to 1.13 million tonnes, marking a four-month low.
Analysts attribute the decline to Malaysia’s reduced competitiveness against cheaper Indonesian supplies, alongside sluggish demand from key markets such as China, Europe, and the Middle East.
The imbalance between surging output and weaker shipments has created a supply overhang that is weighing heavily on benchmark crude palm oil (CPO) futures.
Prices have already retreated from RM5,049 per tonne in September to RM4,535 by early October, with traders expecting values to hover between RM4,300 and RM4,500 in the near term.
The weakness underscores the challenges Malaysia faces in maintaining market share amid aggressive export pricing by Indonesia and near-record edible oil inventories in importing nations.
India, the world’s largest palm oil buyer, has offered some relief. Ahead of the Diwali festival, Indian refiners boosted purchases by more than 200,000 tonnes, aided by import duty cuts.
Yet analysts caution that festive demand alone may not be sufficient to offset the scale of Malaysia’s stockpile buildup.
Looking ahead, inventories are expected to peak in October before easing as production slows and seasonal demand strengthens.
However, medium term risks loom. The onset of El Niño in 2027 could reduce fresh fruit bunch yields, tightening supply and potentially lifting prices later next year.
For now, the sector remains caught between record breaking supply growth and demand-side weakness, a dynamic that will continue to shape the trajectory of palm oil prices into 2027.
