Southeast Asia Palm Oil Production to Decline in 2025-2026

Structural Challenges and Global Pressures

Palm oil production in Southeast Asia is forecasted to weaken during the 2025-2026 season. According to Kian Pang Tan, an analyst at LSEG Singapore, the decline is attributed to a combination of structural issues in plantations, prolonged dry weather conditions, and global trade pressures. These factors are expected to significantly impact production levels across the region.

Global Economic Slowdown

The International Monetary Fund (IMF) has predicted a slowdown in major economies that are key importers of palm oil. Economic growth is expected to decelerate to 4.2% in China, 6.2% in India, and 1.1% in the European Union by 2026. This anticipated economic slowdown will likely reduce demand for palm oil, further exacerbating the production decline.

Regional Impact

The decline in palm oil production will have significant implications for Southeast Asia, particularly for countries like Indonesia and Malaysia, which are among the world's largest palm oil producers. The reduction in production could lead to economic challenges for these countries, affecting both local economies and the global palm oil market.