Indonesian Palm Oil News (IPO News), Kuala Lumpur — Global palm oil trade is expected to face changes in supply patterns in 2027. The Malaysian Palm Oil Council (MPOC) projects Malaysia’s palm oil exports to remain at around 16 million tons in 2027, while Indonesia’s exports are expected to decline.

The projection was presented by MPOC on September 22, 2026, citing analysis by Oil World. According to the projection, Indonesia’s palm oil production in 2027 is expected to decline by around 1.9 million tons, while Malaysia’s production is projected to fall by approximately 700,000 tons.

More notably, Indonesia’s palm oil exports are projected to decline by nearly 3 million tons in 2027. One of the factors cited is rising domestic demand for biodiesel blending, which means a larger portion of Indonesia’s CPO production is being absorbed by the domestic market.

Malaysia to Maintain 16 Million Tons of Exports

Despite the projected decline in production, Malaysia is expected to maintain palm oil exports at around 16 million tons in 2027. The figure is relatively similar to Malaysia’s projected exports for 2026. This indicates that Malaysia is expected to retain significant capacity to supply international markets despite pressures on domestic production.

As of August 2026, Malaysia’s palm oil exports had reached approximately 10.4 million tons, an increase of around 806,000 tons compared with the same period a year earlier. However, exports in August 2026 stood at around 1.29 million tons, down 7.5% from July. The decline was mainly attributed to weaker shipments to several markets in South Asia and the Middle East.

Malaysia’s Production Also Faces Pressure

On the production side, Malaysia is not completely free from challenges. Palm oil production in August 2026 increased 1.4% month on month to approximately 1.81 million tons. However, production remained lower on a year on year basis and had recorded year on year declines for six consecutive months since March 2026. Weather conditions are therefore expected to become an important factor determining palm oil supply in 2027.

MPOC noted that drier conditions associated with El Niño had begun to emerge in Malaysia and Indonesia since early August. The impact on oil palm plantations is expected to become clearer over the following months, making weather conditions toward the end of 2026 an important factor for the industry to monitor.

Indonesia’s Exports May Face Biodiesel Pressure

For Indonesia, biodiesel development has become one of the key factors in determining export availability. Indonesia remains the world’s largest palm oil producer, while at the same time facing growing domestic demand. The use of CPO for biodiesel programs means an increasing portion of palm oil is being allocated to the domestic market.

Oil World, as cited by MPOC, estimates that Indonesia’s palm oil exports could decline by nearly 3 million tons in 2027. The projection is significant for the global market because any change in Indonesia’s export volume will directly affect the amount of palm oil available to international buyers.

Under these conditions, the global market will increasingly focus on the balance between CPO production, domestic consumption, biodiesel demand, stocks and exports from the world’s two leading palm oil producers, Indonesia and Malaysia.

Vegetable Oil Demand Becomes a Key Factor

The potential supply constraints are emerging at a time when global vegetable oil consumption is expected to grow faster than production. MPOC stated that production of the four major vegetable oils in 2027 is expected to increase by only around 3.1 million tons, while consumption is projected to rise by approximately 6.1 million tons.

If these projections materialize, demand growth would exceed additional production. Such a situation could result in a tighter global vegetable oil market. For the palm oil industry, developments in production in Indonesia and Malaysia will therefore be critical. Higher production in Latin America is expected to provide additional global supplies, but may not fully offset potential declines in Southeast Asian production.

Palm Oil Market in 2027 Will Be Highly Influenced by Supply

The MPOC projection provides an important picture of the global palm oil industry heading into 2027. Malaysia is projected to maintain exports at around 16 million tons, while Indonesia’s exports could decline by nearly 3 million tons. At the same time, global vegetable oil consumption is expected to grow faster than production.

However, all of these figures remain projections, rather than final outcomes. Actual production will depend heavily on weather conditions, plantation productivity, palm oil and energy prices, biodiesel policies, and demand dynamics in importing countries.

Therefore, developments in Indonesian and Malaysian production and exports from late 2026 through early 2027 will be important indicators of how tight global palm oil supplies may become next year.

Reported by IPO NEWS based on an official statement from the Malaysian Palm Oil Council (MPOC) and related sources.

Muslim M. Amin
Editor in Chief
Indonesian Palm Oil News (IPO NEWS)

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