The plantation sector in Malaysia is expected to face a more challenging operating environment this year, according to a report by The Star.
Despite relatively stable production prospects, crude palm oil (CPO) prices were likely to remain range-bound amid elevated stock levels and subdued export demand, the 16 January report said.
Based on updates from the Malaysia Palm Oil Board (MPOB) at the Palm Oil Conference and Seminar (R&O 2026), MBSB Research expected CPO prices to average around MYR4,200 (US$1,061)/tonne this year, with prices forecast to trade between MYR4,000-MYR4,500 (US$1,011-US$1,137)/tonne as the year progressed.
High opening stocks and modest supply growth would put pressure on CPO prices in the first half of 2026, even as biodiesel mandates in Indonesia provided some downstream support, MPOB said.
The board said it was also expecting Malaysian palm oil production to soften this year, projecting an output of 19.5M-19.8M tonnes, down from a record 20.3M tonnes in 2025, as estates entered a biological tree-rest phase following last year’s yield rebound.
Despite this, MBSB Research said it was forecasting marginal production growth of 1%, reflecting natural yield limitations after two years of recovery.
Meanwhile, the research house said it was also projecting exports to remain soft, with shipments expected to hover around 15.8M-16M tonnes, as demand from key markets such as India, China and the European Union (EU) remained subdued.
According to MBSB Research data, palm oil exports fell 9.7% year-on-year in 2025 to 15.3M tonnes, largely due to a narrower discount against competing vegetable oils and weaker imports from major buyers.
This had contributed to ending stocks surging to 3.05M tonnes, the highest level since February 2019, the research house said.
Commenting on 2025 overall, MBSB Research said: “Compared with 2024, planted area increased by 1.6% year-on-year to 5.7M ha, supported by higher replanting activity, mainly undertaken by private estates and government agencies. This expansion was broad-based.”
Fresh fruit bunch (FFB) yields also improved by 6.4% to 17.77 tonnes/ha, reflecting a higher proportion of mature trees and improved labour availability, it said.
MPOB said that yields had reverted to pre-pandemic levels, last seen in 2019, while oil extraction rates had benefited from stronger harvesting productivity.
Beyond supply-demand dynamics, regulatory developments were also expected to reshape the industry.
MPOB said the Sawit Intelligent Management System would be integrated into the National Traceability System this year, linking plantation mapping, sustainability certification and transactional data.
The integration aimed to “provide end-to-end data visibility” and ensure compliance with global requirements, including the EU Deforestation Regulation (EUDR), The Star wrote.
