Timely rains cushion El Niño blow to Malaysian palm oil output
30/10/2026 (The Star Online), Kuala Lumpur - Malaysia's palm oil output is likely to escape the worst of El Niño, for now, as better-than-expected rainfall limits crop losses, offering a measure of relief from a global cereal and vegetable oil supply squeeze that has fuelled food inflation.
The world's No. 2 palm oil producer is expected to deliver about 19.8 million to 20 million metric tons in 2027, analysts said, which is about 15% above production in 2016, when a strong El Nino curbed yields, but just below this year's expected near-record output of 20.28 million tons.
"We're looking at a shortfall in production next year, no question about it, but nowhere near as dramatic a shortfall as implied by many people," said Julian McGill, managing director of agricultural commodities advisory firm Glenauk Economics.
Still, a steeper decline in top producer Indonesia will leave a supply deficit in the world's most widely used edible oil.
El Niño weather has brought dryness to much of Asia and is expected to intensify in the coming months, hitting global food production, which has kept palm prices elevated despite Malaysia's stocks hitting unprecedented levels in September.
As a historical reference for the potential impact on production in 2027, plantation analysts at Malaysian banks have cited the strong 2015/2016 El Niño, which led to a 13.2% drop in Malaysia's crude palm oil output in 2016.