Malaysia's Palm Oil Stocks Soar Amid Sluggish Demand and El Nino Fears

Palm oil prices are under pressure due to rising inventories in Malaysia and sluggish buying by India, its largest importer. Malaysian stocks have risen above an eight-month high of 2.82 million metric tons recorded in August and are expected to reach 3 million metric tons by the end of this month.

Tajgir Rahman, general manager at International Foodstuffs Co (IFFCO), said that Malaysian stocks would put pressure on prices if they rise above 3 million metric tons. The last time inventories exceeded 3 million metric tons was in December 2025, when Malaysian futures fell to around 4,000 ringgit a ton.

Malaysian palm oil exports have fallen by as much as a quarter from the same period a month earlier, while production rose in September, one of the peak production months. However, officials expect stocks to start easing from around October as production declines.

The impact of this year's El Niño, which is exceptionally strong, on palm oil yields has yet to be felt and may not be clear until mid-2027. Despite near-term downside risks being limited, prices are expected to rise as soon as production declines become apparent and exports increase.