Malaysia palm oil market size was valued at USD 18.1 Billion in 2022, which is expected to grow to USD 28.2 Billion in 2030 with a CAGR of 5.7% during the forecast period, between 2023 and 2030. Malaysian palm oil industry relies on the versatile and cost-effective nature of palm oil which positions it as a staple in global edible oil consumption both at home and in importing countries. The demand for palm oil is further reinforced by its widespread utilization in cooking, food processing, and various applications which serves as the driving force behind Malaysia’s export-oriented palm oil sector. Furthermore, the Malaysia government initiatives are dedicated for the incorporation of biofuels derived from palm oil that has introduced an additional layer of significance to this sector. In a collaborative pursuit of reducing reliance on fossil fuels and mitigating carbon emissions, the viability of palm oil as a renewable energy source has captured the focused interest of policymakers and various industrial sectors in the country.
The trajectory of the nation’s palm oil sector is molded by a symphony of external forces including considerations of sustainability, technological progress, weather dynamics, and evolving dietary preferences since Malaysia is one of the largest exporters of palm oil.
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Increasing Investment in Biofuels
The significance of employing palm oil for biodiesel production in Malaysia has grown significantly, particularly as the nation strives to diminish its reliance on conventional fossil fuels and address environmental considerations. Policies specifically tailored to biofuel mandates and incentives greatly impact the demand for palm oil, particularly in aviation fuel production as the aviation industry seeks to integrate sustainable alternatives.
For instance, in August 2023, Malaysia’s Palm Oil Board and the state oil company Petronas (IPO-PETO.KL) entered into a collaborative agreement aimed at investigating the utilization of recycled cooking oil and byproducts from palm oil processing as viable sources for sustainable aviation fuel. This memorandum of understanding (MoU) signifies their joint commitment to exploring the feasibility of leveraging palm-related resources like used cooking oil and palm oil mill waste, such as effluent, as primary inputs for domestic bio-refineries. Rising development of integration of palm oil into biofuel will increase the demand for palm oil in Malaysian market.
Strong Export Market to Create Extensive Demand
The growing worldwide appetite for palm oil stemming from its multifaceted utility, economical attributes, prevalence in cooking, and food manufacturing constitutes a driving factor behind Malaysia’s export-oriented palm oil industry. Positioned as a prominent global palm oil exporter, Malaysia’s economic fortunes within this sector are closely interwoven with the flows of international trade policies, tariff structures, and agreements each of which wields a notable impact on the nation’s palm oil export dynamics.
For instance, the export volume of palm oil and its derived products from Malaysia during 2022 exhibited a 2.8% increase reaching 11.47 million metric tonnes (MT) as compared to 11.15 million MT in the same period of the preceding year. As the demand for palm oil in importing markets are likely to improve, so does the demand for palm oil in Malaysia.
Impact of COVID-19
The COVID-19 pandemic significantly affected the demand for vegetable oils, particularly palm oil. Countries including Malaysia enforced lockdowns, leading to the closure of businesses such as those in transportation and the food industry, weakening the demand for palm oil globally. The Malaysian palm oil sector which heavily relies on manual labor, experienced substantial repercussions due to the complete lockdown. Workers related issues such as labor shortages had a notable impact on palm oil production in Malaysia. The production level got hit by the pandemic and the cost of crude palm oil increased, however the weak export demand helped to keep the price in check in Malaysia.
Impact of Russia-Ukraine War
The ongoing conflict between Russia and Ukraine did not immediately affect the Malaysia palm oil market. However, as Ukraine holds a prominent position as a major exporter of sunflower oil, so the conflict disrupted its oil supply chain. Consequently, this disruption led to an increased demand for substitute oils like palm oil, particularly at the outset of the conflict. This conflict has put pressure on the Malaysian palm oil manufacturers as global demand for vegetable oil increased due to the shortage of sunflower oil which further tightened the situation of Malaysian palm oil manufacturers.
Malaysia Palm Oil Market: Report Scope
“Malaysia Palm Oil Market Assessment, Opportunities and Forecast, 2016-2030F”, is a comprehensive report by Markets and Data, providing in-depth analysis and qualitative & quantitative assessment of the current state of palm oil market in Malaysia, industry dynamics, and challenges. The report includes market size, segmental shares, growth trends, COVID-19 and Russia-Ukraine war impact, opportunities, and forecast between, 2023 and 2030. Additionally, the report profiles the leading players in the industry mentioning their respective market share, business model, competitive intelligence, etc.
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