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Note: This article was AI-translated from Arabic and is currently under manual review. The author is not responsible for any translation errors. Please refer to the original Arabic text for the most accurate and authoritative information.
Malaysia's palm oil stocks rose to 3.62 million tonnes at the end of October 2026, up just 3.15% from September. The figure came in below the market's average forecast of 3.75 million tonnes, mainly because exports jumped 55.75% to 1.71 million tonnes while production grew only 1.74%.
Stocks remain heavy, about 47% above their October 2025 level. But the pace of the build-up has clearly slowed: September added about 692,000 tonnes to inventories, while October added only about 111,000 tonnes.
In other words, the report is bearish in absolute terms but less bearish than the market feared, and it carries the first sign that external demand has begun absorbing the surplus.
| Item | Sep 2026 (revised) | Oct 2026 (preliminary) | Change |
|---|---|---|---|
| Crude palm oil production (t) | 2,116,950 | 2,153,701 | +1.74% |
| Palm oil exports (t) | 1,097,074 | 1,708,670 | +55.75% |
| Palm oil imports (t) | 58,064 | 26,207 | −54.86% |
| Total palm oil stocks (t) | 3,510,554 | 3,621,164 | +3.15% |
| of which: crude palm oil (CPO) stocks (t) | 2,162,832 | 2,324,211 | +7.46% |
| of which: processed palm oil stocks (t) | 1,347,722 | 1,296,953 | −3.77% |
| Crude palm kernel oil (PKO) production (t) | 209,381 | 231,498 | +10.56% |
| Fresh fruit bunch (FFB) price (RM per 1% OER) | 50.44 | 47.11 | −6.60% |
Source: Performance of the Malaysian Palm Oil Industry table, Malaysian Palm Oil Board (MPOB).
Crude palm oil output reached 2.154 million tonnes, up 36,751 tonnes from September. Sabah produced 490,546 tonnes (+7.16%), accounting for about 89% of the entire monthly increase.
By contrast, output in Peninsular Malaysia held steady at 1.153 million tonnes (+0.10%), and Sarawak at 509,847 tonnes (+0.54%). The Peninsula alone accounts for 54% of production, and its flat output is what kept overall growth limited.
Production came in below the Reuters survey estimate (2.20 million tonnes), even though the Malaysian Palm Oil Association (MPOA) had estimated output for 1–20 October at 6% higher. The gap suggests a slowdown in the last days of the month, consistent with the start of the usual seasonal decline in fourth-quarter production.
Meanwhile, the fresh fruit bunch (FFB) price fell 6.6% to RM47.11 per 1% oil extraction rate (OER). This squeezes smallholder margins and may later weigh on spending on fertiliser and field maintenance.
Palm oil exports jumped by 611,596 tonnes (+55.75%) to 1.709 million tonnes, beating the Reuters survey forecast of 1.60 million tonnes. Cargo surveyors had flagged the trend early: Intertek (ITS) estimated exports for 1–25 October at 1.304 million tonnes, up 46.89%.
The main drivers behind the jump:
Notably, the jump happened without any fiscal incentive: Malaysia's Budget 2027 did not include the crude palm oil export duty waiver the market had been betting on. Price alone opened the way for the shipments.
The activity extended across the value chain: oleochemical exports rose 34.26% to 322,708 tonnes, and palm kernel cake (PKC) exports rose 36.89% to 248,305 tonnes. Biodiesel exports jumped 84.53% but remain marginal at 5,406 tonnes.
October added 110,610 tonnes to inventories, taking them to 3.621 million tonnes and above the September level that traders had described as a record. But the change in the mix matters more than the headline number.
Crude is piling up while processed oil is being drawn down. Crude palm oil stocks rose 161,379 tonnes (+7.46%) to 2.324 million tonnes, while processed palm oil stocks fell 50,769 tonnes (−3.77%) to 1.297 million tonnes. This means exports drew on refiners' stocks while crude kept accumulating in tanks. Crude now makes up 64% of total stocks, which pressures domestic crude prices and explains the fall in the FFB price.
Sabah is the pressure point. Sabah's total stocks rose 126,832 tonnes (+15.50%) to 945,200 tonnes, more than the entire net national increase. By contrast, Peninsular stocks held at 1.914 million tonnes (−0.12%) and Sarawak's fell 1.79%. The picture is clear: Sabah's higher output did not find a sufficient export outlet.
Domestic consumption and stock cover. The table does not publish domestic consumption, but the balance equation (opening stocks + production + imports − exports − closing stocks) points to implied domestic disappearance of about 361,000 tonnes (our calculation). Current stocks therefore cover about 1.75 months of total demand (exports + consumption) at October's pace, a high level of cover by any measure.
Imports fell 54.86% to 26,207 tonnes, and Malaysia imported no crude palm oil during the month. That is to be expected with a domestic surplus of this size.
The most bearish part of the report concerns palm kernel oil (PKO), not palm oil. Crude PKO output rose 10.56% to 231,498 tonnes, while PKO exports fell 1.96% to 73,395 tonnes.
As a result, total PKO stocks jumped 12.92% to 454,479 tonnes, including 294,334 tonnes of crude PKO (+16.33%). These stocks equal about two months of output, a clear sign of pressure on lauric oil prices and, in turn, on the spread between palm kernel oil and coconut oil.
Downstream industries, on the other hand, performed strongly: oleochemical exports +34.26% and PKC exports +36.89%. Higher oleochemical exports mean part of the PKO is being used domestically in manufacturing, but not enough to absorb the extra output.
The figures beat expectations on all three main items: lower stocks, lower production and higher exports.
| Item (million tonnes) | Reuters survey forecast | Oct 2026 actual | Oct 2025 | Year-on-year change |
|---|---|---|---|---|
| Stocks | 3.75 | 3.62 | 2.46 | +47% |
| Production | 2.20 | 2.15 | 2.04 | +5.6% |
| Exports | 1.60 | 1.71 | 1.69 | +1.1% |
The most bearish forecast came from Sunvin Group, which estimated stocks at 3.81 million tonnes, about 190,000 tonnes above the actual figure.
The year-on-year comparison reveals the root of the problem: exports are roughly at last year's level, while stocks are about 1.16 million tonnes higher. The surplus built up over recent months because production outpaced exports, so this is more a supply issue than weak demand.
The market went into the report after a heavy sell-off. The benchmark January 2027 contract on Bursa Malaysia Derivatives closed on 6 November at RM4,258 per tonne, down RM423 in a single week. The same contract stood at RM5,154 on 10 September, a loss of about 17% in two months. The physical CPO price (November South) fell to RM4,100.
Since the figures came in less bearish than expected, prices are likely to get short-term technical support. But stocks of 3.62 million tonnes remain a ceiling on any sustained rally. Before the report, traders expected a trading range of RM4,200–4,400 per tonne this week.
External factors will set the direction as much as the report itself:
The most likely scenario is that stocks peak in November or December, provided exports stay close to their current level. Production usually declines from November to February with the monsoon rains and the palm's biological cycle, which opens the way for stock drawdowns.
What to watch in the coming weeks:
What does this mean for importers? Current prices are the lowest in months and Malaysian stocks are ample, so buyers retain good negotiating room, especially for crude palm oil and palm kernel oil. On the other hand, the start of the seasonal production decline and El Niño risks mean this room may narrow in the first quarter of 2027. Balancing the two is a decision for each buyer, depending on their needs and storage capacity.