Malaysia’s Palm Oil Output Rebounds In June As MPOC Price To Stay Above RM4,400
Business Today (22/07/2026) - Malaysia’s crude palm oil (CPO) production rose 8.0% month-on-month to 1.63 million tonnes in June 2026 as the industry entered its seasonal production upswing, although output remained below last year’s level amid continued supply constraints.
According to the Malaysian Palm Oil Council (MPOC), June production was 3% lower year-on-year, marking the fourth consecutive month of annual declines despite the monthly recovery.
Palm oil exports also improved during the month, increasing 6.1% from May to 1.20 million tonnes, although export volumes were still 4% lower than in June 2025 due to softer demand from key importing markets.
MPOC said weaker oils and fats consumption in major markets, particularly China and India, continued to weigh on exports as both countries grappled with the lingering economic effects of the West Asia conflict.
India’s vegetable oil inventories also remained elevated despite slower imports, indicating weaker consumption amid inflationary pressures.
However, the council expects seasonal restocking ahead of the Diwali festival to provide support in the coming months, noting that India typically imports around 30% of its annual vegetable oil requirements between July and September.
Palm oil is currently the most competitively priced among the major vegetable oils, placing it in a favourable position to benefit from the anticipated increase in demand.
Malaysia’s palm oil supply outlook remains favourable in the near term, supported by improving production efficiency.
Palm oil inventories rose to 2.5 million tonnes in June, while production during the first half of 2026 remained broadly stable.
MPOC attributed the resilience largely to stronger oil extraction rates (OER), which averaged 20.08% during the first six months of the year, compared with 19.45% in the corresponding period of 2025.
The council said this represents the highest extraction rate recorded in a decade, reflecting favourable rainfall conditions in 2025 that improved the oil content of fresh fruit bunches harvested this year.
Nevertheless, MPOC cautioned that a potential El Niño event in early 2027 could reduce oil extraction rates if drier weather materialises.
Globally, vegetable oil prices delivered mixed performances in July.
Palm oil prices rose 3% month-on-month, while soybean oil gained 6%, supported by robust biodiesel demand in the United States and Indonesia.
In contrast, sunflower oil and rapeseed oil prices declined by 1% and 2%, respectively.
MPOC said strong biodiesel consumption, particularly Indonesia’s implementation of its B50 biodiesel mandate beginning in July, continues to provide a structural floor for both palm oil and soybean oil prices.
The council also noted that renewed US-Iran tensions have lifted gasoil prices by around 30% between early and mid-July, improving biodiesel economics and supporting vegetable oil markets.
While global oilseed production is expected to continue expanding in the 2026/27 season, MPOC said growth is likely to moderate.
Combined production of soybeans, sunflowerseed and rapeseed is forecast to increase by 16.5 million tonnes, significantly below the average annual increase of 22.7 million tonnes recorded over the past four years.
The slower pace of supply growth, coupled with continued expansion in vegetable oil demand—particularly from the biofuel sector—is expected to provide longer-term support for global vegetable oil prices.
Looking ahead, MPOC expects Malaysian crude palm oil prices to trade between RM4,400 and RM4,650 per tonne in August.
The council said prices should remain supported by Indonesia’s higher biodiesel blending mandate, firmer energy markets and favourable biodiesel economics.
However, it cautioned that further upside could be capped by subdued demand in major importing countries and elevated vegetable oil inventories, particularly in India.