Malaysia's Palm Oil Stocks Hit Historic Record High

October 6, 2026 · Bloomberg HT

Palm oil stocks in Malaysia, one of the world's largest producers, surged to a record high of 3.45 million tonnes in September.

Record Palm Oil Stocks in Malaysia

According to a survey conducted by Bloomberg with industry executives and analysts, palm oil stocks in Malaysia, one of the world's largest producers, increased by approximately 22% month-on-month in September. The country's total stock volume is estimated to have reached 3.45 million tonnes. This level indicates an increase beyond the historic peak of 3.22 million tonnes recorded in December 2018. The total increase since April, when stocks began to rise, has approached 50%. This rapid growth in global vegetable oil supply is being closely monitored by the markets.

Production Increase and Export Decline

Crude palm oil production across Malaysia rose by 16% in September to 2.11 million tonnes. This figure marks the highest production level on record for the month of September. Despite the rapid rise in production, export volume decreased by approximately 12% to 1.13 million tonnes, the lowest level in the last four months. Stock estimates in the market survey ranged from 2.99 to 3.52 million tonnes, with production expectations distributed between 1.92 and 2.18 million tonnes. Official monthly data will be announced by the Malaysian Palm Oil Board on October 12.

Price Pressure and Futures Trading

Jacquelyn Yow, Regional Plantation Research Manager at CGS International, reported that plantation production traditionally reaches its highest levels in September and October. Yow stated that the production volume, which exceeded expectations, has pushed stocks to record levels, and predicted that crude palm oil prices will move under pressure in the band of 4,300 to 4,500 ringgit per tonne. Benchmark Kuala Lumpur crude palm oil futures prices eased from their peak of 5,049 ringgit reached in September, continuing to trade at 4,535 ringgit on Monday.

Global Demand and Importer Balances

Aditya Jeripotula, South Asia Manager at DNext Intelligence, stated that Malaysian products are losing market share because they remain significantly more expensive compared to Indonesian prices. High edible oil reserves in major importing countries are also limiting external demand. India, however, has increased its purchases in recent days, exceeding 200,000 tonnes, ahead of the upcoming festival and boosted by tax reductions. Jeripotula indicated that high stocks could continue to impact global markets until the first half of 2027.

Production Forecasts and Climate Factor

Flooding in plantations on the island of Borneo in the early months of the year, followed by concerns of El Nino-induced drought, have subsided. In its report dated October 1, the U.S. Department of Agriculture raised Malaysia's production forecast for the 2025-2026 period to 20.2 million tonnes, pointing to improved plantation management and labor supply. The survey estimated September imports at 50,000 tonnes, up from 49,524 tonnes in August, with domestic consumption ranging between 350,000 and 410,000 tonnes. The course of climate conditions in the final quarter will play a decisive role in the harvest.

Biodiesel Demand and Future Expectations

Chong Hoe Leong, an analyst at Public Investment Bank, reported that stocks are expected to reach their final peak by the end of October and may begin to decline from November. Leong predicted a contraction of 3% to 8% in total Malaysian and Indonesian production if drought conditions deepen, and noted that fluctuations in crude oil prices could stimulate biodiesel demand. Indonesia's B50 biodiesel mandate is expected to direct more crude palm oil to domestic consumption, and this structural support is assessed to create a foundation for price recovery by balancing global oversupply.

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