Malaysia's palm oil inventories are expected to decline in the first quarter of 2027 as production slows

Traders Union
All News
Commodities
Palm oil inventories to decline in 2027

Highlights

Malaysia's palm oil inventories are expected to remain high through the end of 2026 before starting to decline in the first quarter of 2027 as production growth moderates.
Malaysia's palm oil stocks rose 3.2% month-on-month to a record 3.62 million tonnes in October 2026, with production up 1.7% and exports surging 55.7%.
CGS expects Malaysia's export momentum to moderate after Indonesia cut crude palm oil export duties and levies by 20% from November 2026, potentially shifting demand.

This article was translated from the original. Read the original version by our correspondent here.

Inventory outlook and market factors

As reported by The Edge Malaysia, CGS International expects Malaysia's palm oil inventories to remain high through the end of 2026 before starting to decline in the first quarter of 2027 as production growth moderates. The firm said any return of dry weather and strong biofuel demand could further tighten the market.

At the time of writing on Wednesday, crude palm oil futures for February 2027 delivery traded at RM4,379 per tonne on Bursa Malaysia Derivatives. CGS said crude palm oil prices would remain under pressure in the near term as long as inventory levels stay high.

In a separate note, Hong Leong Investment Bank said inventories are expected to remain high in the near term, as weaker exports could offset the seasonal slowdown in production, which is expected to begin in November 2026. The investment bank said any exemption from palm oil export taxes could accelerate the inventory drawdown beyond current expectations.

October data and industry impact

Malaysian Palm Oil Board data showed that the country's palm oil inventories rose for a seventh consecutive month, up 3.2% month-on-month to a record 3.62 million tonnes in October 2026. Higher opening stocks and stronger seasonal production outweighed the increase in exports during the period.

Crude palm oil production rose 1.7% month-on-month to a record 2.15 million tonnes in October, supported by seasonal factors, better labour availability and favourable weather conditions. At the same time, palm oil exports surged 55.7% month-on-month to 1.71 million tonnes, driven by higher shipments to India.

The increase in inventories has also raised concerns among independent palm oil millers, who could face difficulty selling their crude palm oil as refineries reportedly shift to halting deliveries amid record-high inventory levels. CGS also expects Malaysia's export momentum to moderate in the coming period after Indonesia cut crude palm oil export duties and levies by 20% from November 2026, a move that could shift demand towards Indonesian palm oil products.

HLIB maintained its average crude palm oil price assumptions at RM4,450 per tonne for 2026 and RM4,500 per tonne for 2027. The outlook is supported by a tightening supply-demand balance as stronger Indonesian biodiesel demand coincides with El Niño-related production losses.

Earlier, we reported that Malaysia's CPO reference price for November was lowered, while the export duty remained at 10%.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.