Malaysian Palm Oil Exports Face Pressure As Indonesia Pushes Cheaper Supplies Ahead Of New Export Rules

KUALA LUMPUR, June, 2026 – Malaysian palm oil exports may come under fresh pressure in June as buyers consider shifting purchases towards cheaper Indonesian supplies. The pressure comes as Indonesia begins overhauling its commodity export system, creating incentives for producers to move cargoes before the new rules are fully implemented.

Malaysia’s palm oil market is facing renewed uncertainty as Indonesia’s new export system begins its transition period. Under the new mechanism, producers are required to submit sales figures through the newly formed state-owned company PT Danantara Sumberdaya Indonesia.

Companies are still allowed to handle transactions during the transition phase, but Danantara may begin taking over specific export activities as early as September, with full implementation expected by January 1, 2027.

The policy shift has created uncertainty across the regional palm oil market. Initial expectations suggested that Indonesia’s new export rules could divert demand to Malaysia, but that has not happened so far because key importers, especially India, had already made large purchases in the first quarter of the year.

According to industry observers, Malaysia could face stronger competition if Indonesia accelerates exports before the new export mechanism is fully enforced. Such a move could intensify competition and weigh on Malaysian palm oil shipments.

The pressure is also being felt in the futures market. Malaysian palm oil futures have already been affected by sluggish exports and softer energy prices, which have reduced palm oil’s appeal as a biofuel feedstock. Indonesian palm oil is currently more attractively priced than Malaysian supply, giving Indonesia room to capture more market share.

Malaysian palm oil exports fell 6.2 per cent in May from the previous month to 1.22 million tonnes, based on the median estimate from plantation executives, traders and analysts in an industry survey. This marked the weakest export level since February and followed a 14 per cent decline in April.

The same survey estimated that Malaysian palm oil inventories rose 2.2 per cent to 2.36 million tonnes, while crude palm oil production fell 4.9 per cent to 1.55 million tonnes. The Malaysian Palm Oil Board is scheduled to publish its official data on June 10.

A continued decline in exports would be a concern for Malaysia, the world’s second-largest palm oil producer. Lower shipments can pressure prices, increase stockpiles and affect earnings for plantation companies, refiners and exporters.

Benchmark palm oil futures fell as much as 1.1 per cent to RM4,625 per tonne, reflecting market caution over the export outlook and Indonesia’s policy transition.

However, not all analysts believe Malaysian exports will remain weak. Some analysts said exports could recover in June as lower prices in May may encourage major importers to restock after two months of slower buying.

This means the market outlook remains mixed. On one side, cheaper Indonesian supply could reduce demand for Malaysian palm oil. On the other side, uncertainty over Indonesia’s new export system could make Malaysia more attractive to buyers who prioritise reliability and predictable shipment flows.