KUALA LUMPUR: The decline in Malaysia’s palm oil exports to China is driven primarily by pricing pressures rather than geopolitical factors.
Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said the recent downturn reflects a widening price gap between palm oil and competing oils, particularly soybean oil, which has reshaped buying patterns in one of Malaysia’s most important markets.
“Our exports to China have come under pressure mainly because palm oil has been trading at a higher price than soybean oil.
“In China, soybean oil is a major edible oil for both consumers and industry. When its price falls, it naturally pulls the market down – but palm oil prices have remained consistently elevated,” he told reporters after attending the Industry Dialogue with Chinese Buyers today.
Johari noted that the price difference between the two commodities had at one point reached US$120 per tonne, a spread he described as significant enough to influence purchasing decisions.
“US$120 is not a small gap. Like us, Chinese buyers will choose the more affordable option when preparing products for domestic consumption,” he said.
Despite the short-term shift, Johari expressed confidence that market fundamentals would rebalance. “Over time, soybean oil prices will normalise. What matters now is that we understand the decline is not driven by geopolitics, but by pricing dynamics.”
Johari said pricing was a central focus during the dialogue session with Chinese buyers, who expressed interest in purchasing more Malaysian palm oil but sought lower selling prices to remain competitive in their domestic market.
“They told us they are willing to buy palm oil, but they want it at a lower price. I explained that we cannot simply lower prices because Malaysian palm oil is traded on the international market.”
To address their concerns, Johari proposed a structured approach involving Malaysia’s major industry players, who collectively produce about 19.4 million to 19.5 million tonnes of palm oil annually.
“We suggested that the Chinese buyers meet with our key producers to explore practical solutions. If Chinese buyers are prepared to commit to purchasing palm oil for an entire year, our local producers may be able to offer a discount. But this has to be based on firm commitment – not day-to-day negotiations,” he said.
The goal, he added, is to create a mutually beneficial arrangement that supports stable demand while giving buyers greater pricing certainty.
Moving on, Johari said Chinese buyers raised questions about whether potential US tariffs could indirectly affect their palm oil purchases.
“One of the issues they raised was whether US tariffs would have any impact on their imports. I told them clearly that palm oil has nothing to do with the US. There are no US tariffs on palm oil, and any other US trade measures do not affect our palm oil supply to China,” the minister said.
Johari emphasised that Malaysia’s trade flows with China remain stable and uninterrupted.
“As far as we are concerned, our imports and exports with China continue as usual. Everything is operating normally. There is no problem whatsoever in our engagement with China – they remain our number one trading partner,” he added.
Johari also encouraged Chinese companies to consider deeper investments in Malaysia, particularly in technology-driven segments across the upstream, midstream and downstream value chains.
“China has strong technological capabilities and continues to
innovate new applications for palm oil through research and development. I urged them to come to Malaysia, bring their companies here, and explore partnerships with Malaysian investors.”
Such collaborations would create stronger domestic capabilities and open opportunities beyond the local market, Johari said. “If they establish joint ventures with Malaysian investors, the companies will become genuinely Malaysian entities – and from there, the global market becomes accessible. We welcome them to explore these opportunities.”
Johari emphasised Malaysia’s commitment to sustainability, stressing that the industry is shifting firmly towards responsible and efficient practices rather than land expansion.
“We are fully focused on sustainability. We are not pursuing deforestation anymore. Instead, we are concentrating on improving yields through better planting materials and stronger agricultural practices. In the long run, this approach brings greater benefits, especially for our environment,” he said.
The sector is moving towards a circular economy model, ensuring that plantation by-products are reused rather than discarded, he added.
“Whatever waste is generated in our plantations, we aim to turn it into value. We have reached a point where waste has become minimal because almost everything is repurposed.”
Johari highlighted that empty fruit bunches are now widely used as feedstock for renewable energy and for the production of bio-based products.
He also noted that palm oil mill effluent and used cooking oil are increasingly being channelled into advanced biofuel production, including sustainable aviation fuel (SAF).
“Just recently, I officiated the first shipment of SAF from Johor. It’s a Hong Kong-based biofuels producer, EcoCeres, which has a processing capacity of 350,000 tonnes. They told me that as long as Malaysia can supply palm oil and used cooking oil, they will take everything.”
These developments reinforce Malaysia’s position as a reliable and forward-looking supplier in the global renewable energy ecosystem, Johari said.
