Palm oil glut in Malaysia threatens small producers and farmers
In Ukraine, UkrAgroConsult reported that record-high palm oil inventories in Malaysia are creating serious challenges for independent palm oil millers and smallholders. Amid oversupply, refineries are reducing purchases of crude palm oil (CPO) from third-party suppliers, prioritizing output from their own mills.
As a result, independent producers are accumulating unsold stocks and facing shortages of storage capacity. Industry participants expect difficult market conditions to persist over the next two months, while sales disruptions could continue until February 2027 without government intervention, according to the report.
According to the Malaysian Palm Oil Board (MPOB), Malaysia’s total palm oil inventories increased by 24.54% month-on-month in September 2026 to a record 3.51 million tons, compared with 2.82 million tons in August. Crude palm oil production rose by 16.48% to 2.12 million tons, while total palm oil exports declined by 12.13% to 1.12 million tons. CPO stocks increased by 31.88% to 2.16 million tons, while processed palm oil inventories grew by 14.33% to 1.35 million tons. MPOB is scheduled to release its October production, export and inventory data on November 10.
Due to difficulties in selling their output, some independent mills have been forced to store crude palm oil for extended periods, causing certain batches to deteriorate in quality and fall below export specifications. Further stock accumulation could force millers to stop purchasing fresh fruit bunches (FFB) from farmers, as the fruit must be processed within 24–48 hours of harvesting, the report added.
Category: Food & Agriculture
