Palm Oil Demand Remains Strong Despite Haze Concerns

The ongoing haze in Southeast Asia has raised concerns about the environmental reputation of palm oil, but industry data suggests that demand for the commodity remains strong. According to the United States Department of Agriculture, Malaysia and Indonesia dominate global palm oil production, accounting for 83% of the global total.

The Malaysian Palm Oil Board (MPOB) has stated that regional forest and peat fires cannot be attributed primarily to oil palm cultivation, with satellite mapping showing hotspots across multiple land uses. The industry regulator has introduced advanced tracking systems, including the GeoSAWIT geospatial platform and Sawit Intelligent Management System, which allow for definitive verification of licensed estates operating under strict fire-free protocols.

Despite environmental concerns, Malaysian palm oil exports increased 10.4% year-on-year to 7.68 million tonnes in the first half of 2026, while crude palm oil production rose 0.6% to 9.02 million tonnes. The average CPO price remained above RM4,300 per tonne, and palm oil stocks stood at 2.54 million tonnes at the end of June.

Climate-related issues are creating a 'double risk' situation for smallholders and plantation workers whose livelihoods depend on the crop. On one hand, they face immediate reputational damage from transboundary haze caused by external fires, while on the other hand, severe heat threatens their future harvests. The industry's current commercial performance does not point to an immediate impact from the haze.