El Niño may reduce Malaysia’s palm oil production, USDA says
In Ukraine, UkrAgroConsult reported that the global palm oil market could face tighter supplies in the marketing year 2026/27 as El Niño threatens palm oil production in Malaysia. At the same time, domestic demand in Malaysia is expected to increase following the nationwide expansion of the mandatory B15 biodiesel blend. The outlook was presented in a new report by the U.S. Department of Agriculture (USDA).
The USDA lowered its forecast for Malaysia’s palm oil production in the 2026/27 marketing year to 19.7 million tons, citing expected dry weather associated with El Niño.
The agency expects lower rainfall to reduce fresh fruit bunch yields, with the strongest impact likely to be felt during the third and fourth quarters of the marketing year due to the delayed response of oil palm trees to moisture stress.
In contrast, the production estimate for the 2025/26 marketing year was raised to 20.0 million tons, up 300,000 tons from the previous year. According to the USDA, cumulative output between October 2025 and May 2026 exceeded the same period a year earlier by more than 1 million tons.
Category: Food & Agriculture
