Palm Oil Exports to Be Routed Through a Single Channel via a State-Owned Enterprise: Malaysia Poised to Benefit?

Jakarta — Crude palm oil (CPO) prices fell after the Indonesian government announced new policies on commodity exports. President Prabowo Subianto’s speech about forming PT Danantara Sumber Daya Indonesia has also left the CPO market in an awkward position.

As a note, President Prabowo intends to establish a dedicated export state-owned enterprise. The sale of all Indonesia’s natural resources, from palm oil, coal and ferro alloys, must be conducted through a Special Export State-Owned Enterprise.

Markets fear the new policy could alter the global palm oil export mechanism and tighten supply from Indonesia, which has long been the world’s largest supplier.

Yet, at the same time, weak data on Malaysian exports and slowing global demand have restrained gains in palm oil prices.

As a result, market participants are awaiting clarity on the implementation of Indonesia’s new rules before determining the next price direction.

Today, Thursday (21 May 2026), CPO prices fell 0.56% to MYR 4,556 per tonne. The decline extends the negative trend from Wednesday (20 May 2026), when CPO fell 0.05% to MYR 4,583 per tonne.

Earlier, the government tightened oversight of the domestic palm oil industry. Indonesia has handed over around 4.12 million hectares of palm oil land to Agrinas Palma Nusantara as part of cracking down on illegal plantations and strengthening management of the national palm oil sector.

The One-Window Export Scheme Still Raising Concerns

The government’s plan to centralise commodity exports through PT Danantara Sumber Daya Indonesia continues to raise big questions among global palm oil industry players. The one-window export mechanism is seen as potentially changing Indonesia’s palm oil trade structure, which has been market-based and involves many exporters.

Several concerns were raised by figures representing related institutions:

Malaysia Could Benefit, But Not Without Risks

Amid the uncertainty over Indonesia’s new export rules, Malaysia is seen as potentially the biggest beneficiary. M.R. Chandran, former chairman of the Malaysian Palm Oil Association, said global buyers are likely to look for suppliers deemed more stable and with less risk of government intervention.

He also believes Malaysia could become the main alternative for global importers if the market views Indonesia’s export mechanism as potentially slowing global palm oil distribution.

Paramalingam Supramaniam, director of Pelindung Bestari brokerage, said buyers are likely to shift some demand temporarily to Malaysia until Indonesia’s rules become clearer.

Nevertheless, Malaysia’s palm oil industry itself is not yet fully strong.

The market remains shadowed by weak Malaysian palm oil exports in the period 1-20 May, down about 13.9% to 20.5% from the previous month. This suggests global demand remains cautious amid the volatility in the global edible oil market.

Additionally, the strengthening of the Malaysian ringgit by around 0.18% against the US dollar makes Malaysian palm oil price less attractive to foreign buyers.

On the production side, Malaysian palm oil producers have started reducing replanting activity due to higher fertiliser and fuel costs. The postponement of replanting is feared to affect the sustainability of global palm oil supply in the long term.

Global Palm Oil Market Enters a Wait-and-See Phase

Amid the strong sentiment affecting the global edible oil market, current palm oil price movements remain largely subdued. The market is seen as wait-and-see while awaiting the tangible impacts of Indonesia’s new export policy and other global developments.

Malaysia’s August-delivery palm oil futures closed nearly flat on 20 May 2026. After the President’s announcement on forming Danantara Sumber Daya Indonesia, Malaysian palm oil rose about 2% before retreating again.

Other sentiment also comes from rising biodiesel demand, including Indonesia’s implementation of B50. The market also remains exposed to risks of reduced production due to El Niño and high replanting costs.

Additionally, U.S. President Donald Trump said the Iran conflict is expected to end ‘very quickly’. The statement weighed on global crude oil prices by up to 1%, making palm oil less attractive as a biodiesel feedstock and limiting further CPO price gains.

The various sentiments that have emerged together leave the global palm oil market in a state of significant uncertainty, and traders have yet to react decisively.