Local Oil Palm Output Falls In Feb, Price To Stay Above RM4,450 Amid Energy Disruption
19/03/2026 (Business Today) - Malaysia’s crude palm oil production declined seasonally in February to 1.28 million tonnes, down 18.5% month-on-month due mainly to fewer harvesting days during the shorter month and the Lunar New Year public holiday period.
Despite lower output, exports remained relatively firm, accounting for about 88% of production, helping to reduce stock levels. Shipments fell 22.5% from January to 1.12 million tonnes, but cumulative exports for the first two months of 2026 still rose 18.7% year-on-year to 2.58 million tonnes, driven largely by stronger demand from India.
Palm oil leads vegetable oil price rally
Global vegetable oil prices have moved into an uptrend in March after consolidating since mid-2025, supported by rising crude oil prices and logistical disruptions linked to the closure of the Strait of Hormuz. Several Middle Eastern refineries have also declared force majeure, tightening supply conditions.
Among major edible oils, palm oil has led the rally, climbing about 10% since the outbreak of hostilities on 27 February, compared with gains of 4% for rapeseed oil, 3% for sunflower oil and 1% for soybean oil.
Higher global gasoil prices have also improved the economics of biodiesel blending. The biodiesel industry in Brazil has called for an increase in the blending mandate from B15 to B16, while Indonesia is accelerating road tests for B50 biodiesel blending as part of efforts to reduce fuel import dependence.
India demand strengthens amid freight advantage
India’s palm oil imports rebounded strongly in January and February, rising 149% year-on-year to 1.6 million tonnes, supported by shorter delivery times from Malaysia compared with South American suppliers. Shipping voyages from South America typically take six to seven weeks, versus just seven to ten days from Malaysian ports, reinforcing palm oil’s competitiveness despite price parity with soybean oil in March.
Oilseed planting shift may pressure rival oils
Elevated vegetable oil prices and an oversupply of oil meals and feed grains have encouraged farmers globally to prioritise planting of sunflower seed and rapeseed, which have relatively high oil content of around 41%–43%.
As a result, combined global production of sunflower seed and rapeseed is projected to increase by 6.8 million tonnes to 149 million tonnes in the 2026/27 marketing year. This could place downward pressure on sunflower oil prices in the coming months if supply expansion materialises.
Outlook: prices seen firm but volatile
Analysts expect palm oil prices to remain above RM4,450 per tonne in the near term, supported by elevated energy prices and a favourable palm oil-gasoil spread.
However, weaker global economic growth and ongoing geopolitical uncertainties in the Middle East could temporarily delay imports from major consuming markets, potentially capping further price gains and contributing to heightened price volatility.