Malaysian exports are expected to continue to be squeezed by the pressure of cheap supplies from Indonesia as Jakarta overhauls its commodity delivery system.
Indonesia has just begun a plan to take control of exports through a new state-owned firm, PT Danantara Sumberdaya Indonesia, starting in early June. The move has sparked a phenomenon where producers there are centralised to push out their cargoes before the new regulations are fully enforced.
As a result, the market is now flooded with Indonesian supplies that are far more competitive than Malaysia’s offerings.
Malaysian palm oil exports are at risk of plummeting for a third consecutive month in June if buyers continue to favour cheap supplies from across the border. Data shows our overseas shipments in May fell by 6.2 per cent to their lowest level since February.
This situation is also compounded by weak energy prices, thus reducing the appeal of this tropical oil as a biofuel.
Stocks and Production Dilemma
Despite the decline in exports, local palm oil stocks have been detected to have increased by 2.2 per cent to 2.36 million tonnes so far. However, crude palm oil (CPO) production recorded a decline of 4.9 percent. The combination of stockpiling and sluggish demand put futures prices under pressure on commodity exchanges.
May 2026 (Forecast) April 2026 (MPOB) May 2025 (MPOB)
Stocks 2.36 2.31 1.98
Production 1.55 1.63 1.77
Exports 1.22 1.30 1.41
Imports 0.07 0.08 0.07
NOTE: The figures for May, in million tonnes, are based on the median of 11 estimates.
Not all experts see the future as bleak as some expect exports to recover by the end of June. The decline in prices in May may prompt major importers such as India to start replenishing their stocks.
The policy uncertainty in Indonesia also has the potential to be a hidden “blessing” that can redirect buyers’ interest to Malaysia’s stability.
For us as citizens, the fluctuation of this commodity price is not just a number on the stock exchange screen because it is the lifeblood of the rural economy. Low palm oil prices mean that the income of our smallholders will be affected, which ultimately affects purchasing power in the local area.
The importance of maintaining competitiveness at the global level is the main key so that the prosperity of this industry continues to be felt in the kitchen of every family.
