This episode examines recent developments in the global palm oil market.
- In Malaysia, palm oil futures experienced modest gains, driven by concerns over supply shortages and supported by rising Chicago soy oil prices. The November delivery price rose by RM40 to RM4,453 per metric ton. Despite a year-over-year production drop of 1.87 percent for July and August, inventories reached a 20-month high in late August due to increased production and slightly lower exports.
- Export performance remained weak, with shipments declining by 1.2 to 8.4 percent in early September compared to the previous month. Competitive pressure from other vegetable oils, particularly soybean and sunflower oils, and the premium pricing of crude palm oil, are dampening Malaysia's export competitiveness in key markets such as the European Union and India. While domestic production rose slightly by 2.3 percent, declining export volumes offset gains, adding to inventory levels. Increased domestic consumption—driven by biodiesel and oleochemical demand—has helped temper the surplus.
- Looking ahead, Malaysia is expected to sustain production growth, though inventory build-up could weigh on futures pricing. Notably, the European Union's recognition of Malaysian sustainable palm oil standards under deforestation regulations represents a positive step for maintaining market access and improving the country's sustainability profile.
- In Ghana, palm oil consumption (250,000 metric tons annually) significantly exceeds domestic production (about 50,000 metric tons), resulting in heavy import reliance. The Ghana Tree Crops Diversification Project is working to address this gap through seedling quality improvement, expanded cultivation, and better local market integration. However, adoption of modern technologies by local millers remains slow, hindering productivity and efficiency. Government incentives and technological upgrades are seen as essential to strengthening domestic capacity and reducing import dependency.
