Malaysia Palm Oil Output To Decline In 2026, Indonesia To See Growth

Malaysia Outlook  
The decline in Malaysia’s palm oil output reflects challenges such as labor shortages, aging plantations, and slower replanting rates. These structural issues continue to weigh on productivity, limiting the country’s ability to sustain higher yields.  

Indonesia Outlook  
Indonesia, the world’s largest palm oil producer, is expected to see modest growth in 2026. The increase of 0.6 million tonnes is attributed to better plantation management, expansion of cultivated areas, and stronger government support for the palm oil sector.  

Price Forecast  
Palm oil futures in Malaysia are projected to remain firm, trading between 4,000 and 4,300 ringgit per tonne in the first half of 2026, before strengthening up to 4,500 ringgit per tonne later in the year. This reflects tightening supply in Malaysia and steady global demand.  

Key Highlights  

• Malaysia palm oil output seen at 19.7 million tonnes in 2026  
• Decline from 20.3 million tonnes in 2025  
• Indonesia output expected to rise by 0.6 million tonnes  
• Malaysia futures forecast at 4,000–4,300 ringgit/t in H1 2026  
• Prices strengthening to 4,500 ringgit/t later in 2026  

Conclusion  
The diverging production trends between Malaysia and Indonesia, combined with firm price forecasts, highlight shifting dynamics in the global palm oil market. While Malaysia faces structural challenges, Indonesia’s growth reinforces its dominance, with futures expected to remain strong through 2026.  

Sources: Glenauk Economics, Economic Times, Business Standard