Palm Oil Surplus Set to Reach New High as Malaysian Production Outpaces Demand

Malaysia’s palm oil stockpiles are expected to climb to a record 3.76 million tonnes in October as production continues to exceed demand, putting pressure on prices despite a significant increase in exports.

The estimated inventory level would surpass September’s previous record of 3.51 million tonnes, reflecting a growing supply surplus in the world’s second-largest palm oil producer. The latest outlook highlights the challenge facing the industry as stronger overseas shipments have yet to sufficiently reduce the volume of palm oil held in storage.

Rising Production and Storage Pressure Weigh on Palm Oil Market

A Bloomberg survey cited by The Star estimated that crude palm oil production rose about 4% to 2.2 million tonnes in October, while exports jumped 43% to 1.6 million tonnes. However, the export recovery was not enough to prevent inventories from expanding further. The growing surplus could place additional pressure on benchmark crude palm oil prices and strain storage facilities.

Market participants are also watching the potential impact of the El Niño weather pattern, which could reduce production in the coming months. Some analysts expect inventories to remain elevated into early 2027 before tighter supply helps rebalance the market.

Malaysia’s palm oil inventories are forecast to reach 3.76 million tonnes in October as production continues to outpace demand.

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