Malaysia's Palm Oil Stocks Surge to Record High in September

Malaysia's palm oil stocks reached a record high of 3.45 million tons in September, marking a 22% increase from August and surpassing the previous peak in 2018. The surge in inventories was primarily driven by a decline in exports, which dropped 12% to 1.13 million tons. Despite a 16% rise in crude palm oil production to 2.11 million tons, weaker demand kept futures prices under pressure in Kuala Lumpur, trading around MYR 4,535 per ton, or approximately $1,110 per ton.

Analysts at CGS International anticipate that prices will remain under pressure within a range of MYR 4,300-4,500 per ton, roughly equivalent to $1,030-1,108 per ton. Additional downward pressure is coming from Indonesia, which continues to gain market share in global trade. However, demand could receive some support from India, which has increased its purchases ahead of Diwali and following cuts in import duties on vegetable oils.

Looking ahead, production growth may slow due to the impact of El Niño. The USDA has raised its forecast for Malaysia’s palm oil output to 20.2 million tons, citing more effective plantation management. However, analysts expect inventories to remain near record levels at least through mid-2027.