11/02/2026

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WEDNESDAY | FEB 11, 2026

Malaysia optimistic on global palm oil growth opportunities o Market volatility expected to persist this year, sector’s performance in 2025 reflects strong international confidence in country as stable and responsible supplier, says minister

Ű BY JOHN GILBERT sunbiz@thesundaily.com

KUALA LUMPUR: Malaysia’s palm oil industry is facing what top CEOs have described as a “moment of crisis”, as stagnant production, ageing plantations and rising competition from soybean oil threaten the sector’s global competitiveness over the next decade. Speaking at the 37th Palm and Lauric Oils Price Outlook Conference & Exhibition (POC2026) yesterday, industry leaders warned that Malaysia’s 5.7 million hectares of oil palm plantations have largely plateaued, with half a million hectares past peak productive age. Replanting rates improved to 3.4% last year but remain below the annual target of 4% to 5%, highlighting a slow pace of renewal. “Production growth has largely been flat for the last decade. It took us 10 years to reach a record output Ű BY DEEPALAKSHMI MANICKAM sunbiz@thesundaily.com PETALING JAYA: Malaysia remains confident that 2026 will bring greater growth opportunities across the global palm oil industry, driven by stronger international coopera tion, improved trade conditions and collaborative efforts to enhance sustainability and resilience. Plantation and Commodities Minister Datuk Seri Dr Noraini Ahmad said that, despite ongoing global uncertainties, the outlook hinges on last year’s growth, which reflects strong international confi dence in Malaysia as a stable and responsible supplier. She said the total export value of palm oil and palm-based products increased to RM112.51 billion, compared with RM109.39 billion in 2024, reflecting steady global demand and Malaysia’s continued focus on reliability, quality and value-added products. She added, “2025 marked an important milestone for Malaysia’s palm oil industry despite geo political tensions continuing to disrupt trade flows, logistics, and energy markets, with conflicts, supply chain adjustments, and policy-driven trade measures increasing uncer tainty across agricultural and com modity sectors. “For vegetable oils, these pres sures are intensified by climate risks, stricter environmental regu lations, and shifting demand pat terns, while weather-related dis ruptions and biodiesel policies have tightened supply-demand balances and heightened price sensitivity for palm, soybean, and sunflower oils,” Noraini told delegates at the 37th Palm and Lauric Oils Price Outlook Con ference and Exhibition (POC 2026) in Kuala Lumpur yesterday. She said sustainability and trace ability requirements are becoming critical for market access, with regulations such as the European Union Deforestation Regulation marking a major shift in how agri

large estates, but 100% automation is impossible,” said FGV Holdings Bhd group CEO Datuk Fakhrunniam Othman. Panel members highlighted the need to focus on sustainability and certification as both a compliance requirement and a competitive advantage. Malaysia’s National Sustainable Palm Oil Certification (MSPO) covers the entire country’s production and, together with voluntary schemes like ISPO and ISCC, ensures traceability for over 90% of palm oil exported to the EU. “Malaysia rightly takes pride in being one of the most certified palm oil origins globally,” said Haris. “But history alone will not secure the next decade.” Panellists emphasised that growth will increasingly come from operational optimisation and value addition rather than expansion. Kuala Lumpur Kepong Bhd COO Lee Jia Zhang highlighted “So managing risk today means looking beyond palm oil tools alone. Alongside FCPO, Bursa Malaysia has introduced additional contracts to help participants manage related price exposures. For example, Bursa Malaysia DCE Soybean Oil Futures provides an alternative way to reference and hedge against movements in dity. This is so that risks can be transferred efficiently when market conditions shift. Without that depth, price signals become less reliable, and the cost of managing risk increases for everyone.” Across the broader derivatives market, Fad’l said, Bursa Malaysia’s total trading volume reached an all time high of 23.3 million contracts for two consecutive years, with a record daily volume of 197,458 contracts achieved in October last year. “These are positive signs that exchange-based markets are be coming more embedded in how the industry manages risk and plans for the future.” Fad’l noted that palm oil is priced in a global vegetable oil basket; as such, other major oils can influence how buyers switch, how demand shifts, and how prices move. At the same time, energy policies and sustainability requirements are creating additional pressure points, which can drive prices to move faster and be harder to manage.

of 20.28 million tonnes,” said SD Guthrie Bhd group managing director Mohd Haris Mohd Arshad. “If we don’t tackle the ageing trees, rising labour costs and mechanisation limits, the profitability of our industry will start to decline.” Mohd Haris stressed that Malaysia faces intensifying pressure from other oilseed producers. “Soybean oil is catching up fast. Its supply is growing six times faster than palm and is increasingly price-competitive. The economics are shifting, palm is no longer always the cheapest option.” Labour challenges remain acute, with heavy reliance on foreign workers driving costs. While mechanisation and automation can reduce the workforce required for non-harvesting tasks, harvesting itself still demands skilled manual labour. “Mechanisation is a necessity for cultural commodities are sourced, verified and traded globally. Despite these challenges, the domestic crude palm oil production reached 20.28 million tonnes – the highest level on record and the first time production exceeded 20 million tonnes. Further, Noraini said, throughout 2025, the domestic palm oil industry stepped up efforts in certification, traceability and data readiness, helping to strengthen confidence among global buyers and consumers. “As we move into 2026, cooperation across the entire value chain will be crucial. Producers, traders, policymakers and end users must work together to manage market volatility, regulatory changes and shifting demand,” she added. Meanwhile, Bursa Malaysia CEO Datuk Fad’l Mohamed said trading volume of the exchange’s crude palm oil futures (FCPO) grew by 4% to 19.62 million contracts in 2025, as more domestic and international traders are actively and regularly participating in the market. He said the FCPO served as the global benchmark for CPO pricing, providing a reference point for physical trade and hedging acti vities across the industry. “Beyond having a benchmark, what truly matters is market depth. Effective price discovery and hedging depend on consistent participation and sufficient liqui

Noraini (right) and Fad’l looking at items on display in conjunction with the 37th Palm and Lauric Oils Price Outlook Conference and Exhibition in Kuala Lumpur yesterday. – BERNAMAPIC

not the lack of tools – it is having the confidence to use them. “Innovation only helps if companies trust and use the tools. In this environment, future ready markets require tools that truly match the new risks, and the confidence for businesses to use them,” he added.

China’s soybean oil market. “Meanwhile, USD Used Cooking Oil FOB Straits (Platts) reflects price risks linked to used cooking oil that is tied to renewable fuels. Together, they broaden the risk-management toolkit for the edible oils market,” he said. Fad’l said the real challenge is

CEOs warn of ‘moment of crisis’ with ageing trees, stagnant output

core risks. Losing demand resilience is a real threat,” said Goon. “If yields stagnate while competing oils expand, we could see premium disruption, affecting Malaysia’s market position.” The industry is also grappling with generational challenges. FGV’s Othman warned of a talent drain, with younger Malaysians seeing palm oil as a labour-intensive sector compared with tech and e commerce careers. He called for rebranding and modernisation to attract new talent and ensure long-term resilience. As the CEOs concluded, the consensus was clear: Malaysia must act now to increase replanting, mechanise where feasible, optimise

downstream opportunities in food, industrial applications, and emerging sectors such as bioenergy and biochemicals. “Palm oil touches everyday products, from toothpaste to wind turbines,” he said, pointing to potential markets in regions like Africa, where structural demand is set to rise sharply with population growth. FFM Bhd CEO and Wilmar International chief sustainability officer Jeremy Goon echoed the view. “Africa isn’t just a destination for exports, it’s the next market to build. Early investment, strong partnerships and consistent policies will define the winners,” he said, stressing the importance of credibility, reliability and inclusive supply chains linking smallholders. The panel sounded a warning on market volatility too. “High prices and substitution are

operations and leverage sustainability to main tain its foothold in an increasingly competi tive global edible oils market.

See also page 14