Report Highlights:

With small increase in yield and area, palm oil production is forecast to moderately increase to 20.35 million tons in 2014/15. Exports are projected to grow only marginally as the palm oil discount to soybean oil is expected to narrow in 2014/15. Palm oil imports are forecast to continue falling as exportable supplies from Indonesia dwindle. Soybeans remain the top U.S. oilseed export to Malaysia, with expected exports of more than 340,000 tons in 2013/14. Argentina remains the leading soybean meal supplier, with more than 95 percent market share. With marginal growth in broiler industry expected in 2013/14, demand for meal is forecasted to grow slowly in line with demand from the feed industry.

Executive Summary:

Exports of U.S. soybeans to Malaysia are expected to increase from 320,000 tons to 340,000 tons in 2013/14. Total imports are forecast to increase marginally to 625,000 tons. The gradual increase reflects slight growth in broiler and swine sectors in addition to demand from food service sector. For soybean meal, Argentina remains the dominant supplier with market share of over 95%. 

As a result of the unusually dry weather recorded in February and March 2014, and concerns about continued adverse growing conditions the rest of the year, the 2013/14 production forecast remains at 19.2 million tons. The dry weather has caused some plantations to temporarily suspend replanting in West Malaysia. The lower CPO production in west Malaysia due to lower yields (as dry weather caused stressful condition for palm trees) will be compensated for by new mature area in Sarawak. With small increase in yields, output is forecast to increase marginally for 2014/15. 

Palm oil exports are forecast to drop to 17.75 million tons in 2013/14 due to increased domestic consumption for the production of B5 biodiesel mandate. The expected narrowing of the discount of palm oil to soybean oil will also weaken exports. China, India and Pakistan continue to be leading markets, while shipments to the United States remain hover around 1.2 million tons annually. Exports are then forecast to rebound in 2014/15 with the improved production prospects.


There is no commercial cultivation of soybeans in Malaysia.



Soybean imports are projected to increase marginally thorough 2014/15 with an anticipated slight increase in demand from the swine and broiler sectors. The U.S. remains the top supplier, with more than 50 percent market share, followed by Canada and Argentina. The implementation of Goods Service Tax of 6 percent in April 2015 may have a short term effect on consumer demand as the price of pork and chicken products are expected to increase. Once consumers adapt to the new tax structure, demand is expected to rebound.


Soybean crushing activity is growing slightly, as is demand for food quality soybeans. The introduction of a Goods Service Tax in 2015 is expected to negatively affect consumption.

Trade Policy & Market Access

A biotech labeling requirement is set to be enforced on 8th July 2014. Under the labeling requirement, labeling is not required for product containing less than 3 percent GE content, for highly refined foods, and meat from animals fed with GE grains.

In addition, beginning 1st July 2014, soybean imports will require an Import Permit and phytosanitary certificate. A pre-export treatment may also be required, but as of March 2014 the nature of that treatment and the language in the phytosanitary certificate had yet to be clarified.


Expansion of Palm plantation area caused a drop in coconut plantation area, and copra production continues to decline. Most copra is consumed as food (desiccated coconut, coconut cream, etc), leaving a small amount for the crushing sector. Copra output will continue a slow downtrend.


Soybean Meal

Production and Imports

As the swine and poultry sectors are projected to have moderate growth, meal imports are expected to moderately increase through 2014/15. Almost all the meal comes from Argentina.


As demand for poultry and swine products remains firm, soybean meal consumption is forecast to increase marginally in 2013/14 and at slower rate in 2014/15 as the Goods Service Tax slows demand.

Palm Kernel Meal

With anticipation of drop in tonnage of fresh fruit bunch (FFB) production in 2013/14, and a slight drop palm kernel crush, palm kernel meal (PKM) production is expected to slightly drop to 2.48 million tons in 2013/14. Domestic consumption of palm kernel meal remained small as most of the production is exported to New Zealand and EU countries.


Palm Oil

Reportedly, in 2014 dry weather has caused many plantations to delay replanting. Consequently, harvested area of matured plantation is expected to increase relative to earlier forecasts. Nonetheless the yield is expected to decline as production of less productive palm plantations in West Malaysia is offset by new matured plantation in East Malaysia. With less replanting, more mature trees will be harvested with lower yield. In addition, the dry weather is also causing stress on the palm trees thus reducing the fruit’s weight (smaller fruit produced), causing floral abortion and bunch failure further reducing yield potential. 

Fruit-bearing area is expected to expand to 4.8 million hectares in 2014/15, mainly in East Malaysia, with fully matured hectare equivalent (MHE) estimated at around 2.55 million hectares. Yields are expected to moderately increase in 2014/15, in line with the maturity profile.


Indonesia’s increased production of B10 biodiesel, combined with a differential export tax favoring domestic refining, has led to a large drop in exports of palm oil to Malaysia in 2013/14. The lower imports are expected to continue in 2014/15. The rollout of B5 Biodiesel program nationwide in Malaysia is expected to be complete by July 2014, which should increase domestic consumption an additional 250,000 tons. However, rising CPO prices may once again cause the program to be stalled. 

As CPO production is projected to be stagnant, exports are forecast to drop to 17.75 million tons in 2013/14. For 2014/15, exports are projected to slightly drop to 17.6 million.

Trade Policy

The export tax is based on price according to the table below.

CPO price (per ton in USD)*CIF Rotterdam

Export Tax

750 – 800


800 – 850


850 – 900


900 – 950


950 – 1,000


1,000 - 1,050


1,050 -1,100


1,100 - 1,150


1,150 - 1,200


Palm Kernel Oil

Production of Palm Kernel Oil (PKO) is expected to drop by 3.5 percent to 2.18 million tons in 2013/14 from 2.27 tons in 2012/13. Stagnant growth is anticipated for 2014/15, with PKO output estimated to remain at 2.18 million tons. 

PKO exports are forecast to drop slightly to one million tons in 2013/14 and remain constant at below 1.1 million tons in 2014/15. The main destinations are the U.S., China, Japan, Brazil and Egypt. 

Coconut Oil

Total coconut oil import for year 2013/14 is projected at 150,000 tons. Most of the imports are further refined and for re-exported to third countries namely Singapore, Ukraine and Australia with export forecast at 130,000 tons in 2013/14. Coconut oil accounts for less than 1 percent of local consumption