Why it matters: Malaysian palm oil prices influence North American canola prices.

In the attaché’s report released on Jan. 6, they placed total output for the current marketing year at 19.70 million tonnes, an increase from the 19.38 million tonnes produced in 2024/25. Another reason for the uptick this year were the much better weather conditions compared to the storms suffered in 2024/25.

The area harvested was little changed in 2025/26, at 5.15 million hectares, but yields improved to 3.83 tonnes per hectare from 3.77 the year before, said the Kuala Lumpur desk.

Total supply

With a total supply of 22.56 million tonnes, Malaysia is projected to export about 16.20 million, up from 15.59 million in 2024/25, the attaché wrote. They noted that Malaysia is in a good position to maintain or improve its palm oil exports as Indonesia moves ahead with its B50 biodiesel blending policy this year.

Industrial use of 3.15 million tonnes will be little changed from year-to-year, with food use and feed use remaining at 940,000 and 108,000 tonnes, respectively. The attaché said ending stocks for 2025/26 are to dip to 2.16 million tonnes from 2.36 million.

Soybeans

The Kuala Lumpur desk projected Malaysia’s modest soybean industry to remain relatively steady in 2025/26. The country is expected to import 730,000 tonnes of soybeans from the United States, Brazil and Argentina, up from 727,000 in 2024/25.

Malaysia’s total domestic use of soybeans is to increase to 733,000 tonnes from 721,000 in 2024/25 and the carryover is projected to drop to 68,000 tonnes from 81,000.

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Foreign Minister Anita Anand said Canada intends to continue a multilateral trade relationship with the 10-member Association of Southeast Asian Nations. Canada believes the global economy will be driven by the Indo-Pacific region in the years ahead, she added.

Why it matters: While Canada has pursued south Asian and Indo-Pacific markets in recent years, trade tensions with the U.S. have put a spotlight on the need for a greater diversity of trading partners.

“The work is being done with alacrity to finalize the text of the free trade agreement,” Anand told Reuters in an interview, following her meeting with counterparts from the ASEAN bloc in the Malaysian capital.

“It is complex but we are very much looking forward to it being completed as soon as possible,” she said, without providing further details.

Anand said the ASEAN-Canada FTA is one of the ways Canada can diversify its trade relations beyond the Group of Seven nations.

Beyond trade, Canada will also work with ASEAN on energy, food security, digital economy and artificial intelligence, she added.

Canadian companies are boosting trade with allies other than the United States, and with smaller markets, as they try to minimize the economic damage from President Donald Trump’s tariffs, government data has shown.

Canada, the top supplier of steel and aluminum to the United States, faces tariffs imposed by Trump on both metals and on auto exports.

The government is hoping to reach a trade deal with Washington by July 21 and could impose counter-duties on the United States if no agreement is reached.

Anand declined to comment on how the talks are progressing, but said Canada was looking forward to a constructive deal with the United States.

“Our trade negotiators… are engaged in the complex trade negotiations to ensure that Canada’s interests are put forward in the best possible way,” she said.

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Indonesia currently has a mandatory 35 per cent blend of palm oil-based fuel in biodiesel and is seeking to ramp up to biodiesel containing 40 per cent palm oil to cut its energy imports.

The plan, if implemented, could see biodiesel consumption rise to 16 million kilolitres next year.

The move would involve the additional use of 1.5 to 1.7 million metric tons of palm oil, leading to lower export volumes, Oil World senior analyst David Mielke told a palm oil conference in Kuala Lumpur.

“In a situation where we don’t have enough oil, Indonesia increasing the mandate by five per cent would make overall supply tight,” he told Reuters on the sidelines of the event.

“So for the consumer worldwide, it would be catastrophic because there would be even less oil available.”

B40 will boost Indonesia’s palm oil use for biodiesel to 13.9 million metric tons from the estimated 11 million tons needed this year, with B35, Indonesia’s biofuel producers association APROBI has estimated.

In recent years, global palm oil supplies have been affected by lower output in the world’s two biggest exporters, Indonesia and Malaysia, due to a pandemic-induced severe labour shortage, lower application of costly fertilisers, and persistent rainy weather conditions.

Palm oil production is expected to increase by 2.3 million metric tons in 2024/25 compared to the previous season, Mielke said, with the price of rival soybean oil expected to rise at a premium over palm oil at the latest by June next year.

Glenauk Economics managing director Julian McGill told the event palm oil will likely trade at around 4,000 ringgit (C$1,275.60) per metric ton in 2025.

Malaysia’s benchmark crude palm oil futures FCPOc3 are currently trading at a six-month high. Prices have traded at an average of 3,976.50 ringgit (C$1,268.11) a ton so far this year.

The country’s palm oil production is estimated to come in at 19.4 million tons in 2024, compared to 18.55 million tons in 2023, McGill said.

Indonesia’s production was estimated at 54.84 million tons in 2023, according to the Indonesian Palm Oil Association.

—Updated Oct. 9. Changes attribution of Indonesia production statistics to the Indonesian Palm Oil Association.

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In the Global Agricultural Information Network (GAIN) report released on Oct. 4, the attaché estimated Malaysia’s palm oil output at 19.20 million tonnes compared to 19.60 million the previous year, with the area harvested remaining at 5.13 million hectares.

The attaché cited, “the lasting effects of El Nino weather patterns,” as there’s often a six-to-seven-month delay between the weather occurrence and the weather it generates. In this case it would be a lack of rain, particularly in the Malaysian state of Sabah when palm trees were pollinating.

Also, the report pointed to labour issues with plantations unable to hire sufficient numbers of workers.

The USDA’s official estimate of Malaysian palm oil pegged production for 2024/25 at 19.80 million tonnes, up one million from the year before, with area harvested bumping up 50,000 hectares at 5.60 million.

The Kuala Lumpur desk forecast Malaysia’s palm oil exports for 2024/25 at 15.70 million tonnes, down 500,000 from the previous marketing year. However, ending stocks are to rise from 2.25 million tonnes in 2023/24 to just short of 2.40 million this year.

The attaché pointed to India’s recent 22-point hike in its import duty on foreign palm oil to 27.5 per cent, along with a “lack of price competitiveness compared to other edible oils.”

Meanwhile, the department placed 2024/25 exports at 16.50 million tonnes, up 200,000 from the previous year. The carryover was calculated at 2.18 million tonnes, down from 2.22 million.

The USDA is scheduled to release its next supply and demand report on Oct. 11, It’s unknown if the department will incorporate the attaché’s estimates in the report.

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One of those reports pertained to Canada and its wheat production. Written by the USDA attaché in Ottawa, the report stated drought could be a major concern for 2024/25 across the Prairies, citing low snowfall this winter and a lack of soil moisture following the 2023/24 harvest. The attaché added that grasshoppers are set to be an issue for Alberta and Saskatchewan this coming growing season.

Meanwhile, the Ottawa desk pegged the 2023/24 Canadian wheat harvest at 31.95 million tonnes, down from 34.34 million the year before. Exports for this year were forecast at 23.30 million tonnes, short of the 25.60 million in 2022/23. The attaché pegged ending stocks for 2023/24 are expected to dip to 3.54 million tonnes compared to the 3.66 million last year.

In comparison with data compiled by Agriculture and Agri-Food Canada, 2023/24 production was slotted at 31.95 million tonnes, exports of 23.20 million, and a carryover of 3.95 million.

The USDA attaché in Beijing projected China’s 2023/24 corn crop to grow by 4.2 per cent at 288.84 million tonnes due to heavy rains during the summer. Corn imports were forecast to increase to 20 million tonnes in 2023/24 from last year’s 18.71 million. The Beijing desk noted that Brazil, with 10 million tonnes, surpassed the United States in 2023/24 as China’s top source of imported corn.

China’s corn for feed and residual was nudged up from 220 million tonnes in 2022/23 to 223 million. The carryover is to increase to 206.85 million tonnes from 203.03 million.

For Mexico, it’s 2023/24 corn crop faced unfavourable weather, reduced planted area, and smaller than expected yields. The attaché in Mexico City placed the harvest at 25.5 million tonnes compared to the 28.08 million in 2022/23. Corn imports were to bump up from 19.36 million tonnes to 19.60 million. Ending stocks were projected to fall from 4.5 million tonnes in 2022/23 to 2.80 million this year.

The 2023/24 corn crop in South Africa won’t be as large as the previous year’s harvest of 17.06 million tonnes, according to the USDA attaché in Pretoria. The attaché estimated this year’s crop at 15.80 million tonnes, citing rain-delayed planting in some regions of South Africa, with dryness in the North West province. That’s to see exports contract from 3.80 million tonnes in 2022/23 to three million in 2023/24. However, total consumption was projected to rise from 12.75 million tonnes to 13.10 million. In the end, the Pretoria desk set the carryout to decline from 19.01 million tonnes to 18.26 million.

In Kuala Lumpur, the USDA attaché in Malaysia said that country’s palm oil production is to increase from 18.40 million tonnes in 2022/23 to 19 million this year. The attaché pointed to Malaysia being less affected by the El Nino than anticipated, reduced labour challenges, and less replanting of palm trees. Exports were set to climb from 15.36 million tonnes last year to 16.60 million this year. That’s to lead to ending stocks falling from 2.33 million tonnes in 2023/24 to 1.65 million this year.

— Glen Hallick reports for MarketsFarm from Winnipeg. 

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Malaysian chicken production has been disrupted by a global feed shortage.

The export ban is the latest sign of growing food shortages as countries — reeling from Russia’s invasion of Ukraine, extreme weather and pandemic-related supply disruptions — scramble to shore up domestic supplies and tame inflation.

Singapore, although among the wealthiest countries in Asia, has a heavily urbanized area of just 730 square kilometres. Nearly all chicken is imported, with 34 per cent from Malaysia, 49 per cent from Brazil and 12 per cent from the U.S., according to data from the Singapore Food Agency (SFA).

The SFA has said the shortfall can be offset by frozen chicken from Brazil and has urged consumers to opt for other protein like fish.

Malaysia, itself facing soaring prices, has decided to halt chicken exports until the sector stabilizes.

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