Malaysia palm oil production rises 9.4% amid seasonal strength

The Malaysian plantation sector is experiencing seasonal strength, with July crude palm oil (CPO) production rising 9.4% month-on-month to 1.79 million tonnes. This growth was primarily driven by Peninsular Malaysia and Sarawak. Despite the increase in production, the stock-to-use ratio fell to 1.54x from June’s 1.67x, indicating that strong demand is partially offsetting the supply growth.

Exports rose 14.5% month-on-month to 1.39 million tonnes, supported by restocking efforts in India during the festive season. Inventories also climbed 3.3% to 2.63 million tonnes, consistent with typical second-half seasonal build-ups.

Market analysts are monitoring potential supply tightness in 2027, as El Niño impacts could lead to a projected 7% year-on-year decrease in output during the first half of that year. Palm oil futures have shown upward movement, tracking the strength of rival vegetable oils on the Dalian and Chicago exchanges. Prices are also being supported by the commodity's role as a biodiesel feedstock amid strength in crude oil futures.