Palm Oil Production in Malaysia to Increase by 1% in 2026 — Forecast

Two leading investment banks in Malaysia, RHB Research and MBSB Research, maintain a neutral outlook for the plantation sector, predicting a 1% increase in palm oil production in 2026.

This is reported by AgroReview

Record Production and the Impact of Export Restrictions

In 2025, palm oil production in Malaysia reached a record 20.28 million tons, made possible by an increase in fresh fruit yield to 17.77 tons per hectare and improved oil extraction rates. The area of plantations grew by 1.6% year-on-year, reaching 5.7 million hectares. This was the result of implementing tree replanting programs in the peninsular regions of Malaysia, as well as in Sabah and Sarawak.

Despite high production levels, the sector faces several challenges. Palm oil exports fell by 9.7%, dropping to 15.26 million tons due to decreased demand from India, China, and European Union countries. As a result, the level of ending stocks rose to 3.05 million tons — the highest level since February 2019.

“A new pressure factor has emerged with Indonesia’s decision to raise export duties to support its own B40 biodiesel project and to abandon the increase of the mandate to B50, putting Indonesian tropical product producers at a disadvantage.”

2026 Forecasts: Production, Exports, and Prices

According to analysts at MBSB Research, palm oil production in Malaysia is expected to grow by 1% in 2026. However, exports will remain low — around 15.1 million tons, as weak demand in external markets persists. This will lead to further accumulation of ending stocks, which are projected to reach 3.18 million tons.

Regarding price trends, analysts expect the average price of palm oil in 2026 to be around 4200-4250 ringgit per ton. A moderate price increase is anticipated in the second half of the year.