InfoSAWIT, KUALA LUMPUR – Malaysia's palm oil production continued to recover in June 2026, reflecting the seasonal upswing in harvesting activity. Despite moderate global demand, the Malaysian Palm Oil Council (MPOC) expects crude palm oil (CPO) prices to remain resilient at RM4,400–RM4,650 per tonne in August, supported by Indonesia's B50 biodiesel mandate and firmer energy markets.
In its latest market update, MPOC reported that Malaysian palm oil production reached 1.63 million tonnes in June, representing an 8% increase from May as seasonal production gains gathered pace.
However, output remained 3% below the level recorded in June 2025, marking the fourth consecutive month of year-on-year production declines.
Exports also showed signs of improvement. Malaysian palm oil shipments rose 6.1% month-on-month to 1.20 million tonnes in June, although export volumes were still approximately 4% lower than the same period last year.
MPOC attributed the slower export recovery primarily to subdued vegetable oil consumption in key importing markets such as China and India, while ongoing geopolitical tensions in West Asia continued to weigh on international trade flows.
Vegetable Oil Markets Show Mixed Performance
During July trading, vegetable oil prices moved in different directions across global markets. Palm oil prices gained around 3% from the previous month, while soybean oil advanced 6%.
In contrast, sunflower oil and rapeseed oil declined by 1% and 2%, respectively.
According to MPOC, expanding biodiesel demand in both Indonesia and the United States has become one of the key drivers supporting palm oil and soybean oil prices despite uneven global consumption.
Record Oil Extraction Rate Supports Supply Outlook
Malaysia's production outlook has also benefited from a significant improvement in the country's Oil Extraction Rate (OER).
Data from the Malaysian Palm Oil Board (MPOB) showed that average OER reached 20.08% during the first half of 2026, up from 19.45% a year earlier and marking the highest extraction efficiency recorded in the past decade.
The improvement was largely attributed to favorable rainfall throughout 2025, which enhanced oil content in fresh fruit bunches harvested this year. Nevertheless, MPOC cautioned that the possible development of El Niño in early 2027 could reduce extraction efficiency if drier weather conditions emerge.
Biodiesel Policy to Support Prices
Looking ahead, MPOC expects CPO prices to remain within the RM4,400–RM4,650 per tonne range throughout August.
The outlook is underpinned by Indonesia's nationwide implementation of the B50 biodiesel mandate beginning in July 2026, improving energy market fundamentals, and stronger biodiesel economics.
Higher gasoil prices—driven partly by rising geopolitical tensions involving the United States and Iran—have also improved the competitiveness of vegetable oils as biodiesel feedstocks.
Even so, MPOC noted that any significant upside in palm oil prices could be capped by still-moderate global demand and relatively high vegetable oil inventories in several major importing countries.
The council expects demand from India to strengthen ahead of the Diwali festive season, when the country traditionally imports a substantial share of its annual edible oil requirements, potentially providing fresh support for the global palm oil market. (T2)
Source: MPOC
