Palm Oil Paradox: Navigating Malaysian Export Discrepancies for Commodity Gains

The Malaysian palm oil export data released in May 2025 has sparked confusion and debate among commodity traders. While AmSpec reported 720,422 tons exported between May 1–20, rival surveyor SGS estimated just 647,353 tons—a gap of 73,069 tons, or 10.2%. This discrepancy underscores the volatility of short-term data while masking a deeper truth: long-term demand fundamentals for palm oil remain robust, driven by global biodiesel policies, inventory rebalancing, and currency dynamics. For investors, the noise around conflicting export figures offers a strategic entry point to capitalize on the commodity’s trajectory.

The Data Divide: Why the Numbers Diverge

The AmSpec-SGS gap stems from methodological differences:
- AmSpec’s broader coverage: Likely includes smaller ports and transshipment hubs, capturing informal trade flows.
- SGS’s narrower scope: Focuses on major export terminals, missing regional variations.

This split mirrors a broader industry challenge: Cargo surveyors lack standardized methodologies, leading to inconsistent reporting. However, the underlying trend is clearer: year-to-date Malaysian palm oil exports are down 8% compared to 2024, reflecting global buyers’ cautious stance.

Global Demand Drivers: Biodiesel and Inventory Adjustments

Despite short-term volatility, long-term demand remains buoyant, driven by two factors:

1. Biodiesel Mandates:
2. The EU’s Renewable Energy Directive (RED III) mandates 42.5% renewable energy in transport by 2030, spurring demand for palm-based biodiesel.

3. India’s ethanol blending policy, while not palm-specific, creates indirect pressure to expand vegetable oil refining capacity.

4. Inventory Rebalancing:

5. China’s palm oil stocks fell to 1.4 million tons in Q1 2025, a 12% drop from late 2024, signaling restocking needs ahead of peak summer demand.
6. Indonesia’s export tax cuts (e.g., 8% tax at RM3,956/tonne) aim to clear domestic surpluses, but this could tighten global supplies.

FGV’s underperformance vs. the broader market reflects short-term export uncertainty, but fundamentals may justify a rebound.

Currency Dynamics: IDR Weakness Boosts Malaysian Competitiveness

The Indonesian rupiah’s decline (IDR/USD at 15,822 in May, down 0.7% month-on-month) has weakened Indonesian palm oil’s price competitiveness, creating an opening for Malaysian exporters. Key implications:
- Cost arbitrage: Malaysian producers can undercut Indonesian rivals by 2–4% in USD terms, attracting buyers in Europe and the Middle East.
- Trade diversion: India’s palm oil imports from Malaysia rose 15% in April, as buyers pivoted from Indonesia’s pricier supplies.

Investment Strategy: Short-Term Noise vs. Long-Term Signal

While traders may overreact to monthly export data, investors should focus on three actionable trends:

1. Equity Plays:
2. Malaysian plantation giants like IOI Group (IOI) and Sime Darby Plantations (SDP) benefit from currency tailwinds and rising biodiesel demand.

3. Short KLSE:FGV if its production lags due to labor shortages, while buying on dips when export data stabilizes.

4. Commodity Futures:

5. Long palm oil futures (e.g., BMD Palm Oil Futures) as Q3 restocking season approaches. A break above RM4,200/tonne could trigger a rally to RM4,500.

6. Currency Carry Trade:

7. Short IDR/USD positions to capitalize on Indonesia’s trade deficits and policy uncertainty, while pairing with long MYR/USD bets on Malaysia’s export resilience.

Conclusion: Time to Act Amid the Fog of Data

The AmSpec-SGS divergence is a distraction. The real story is rising global demand for palm oil, fueled by biofuel mandates and inventory rebalancing, alongside Malaysia’s competitive edge from currency shifts. Investors who ignore the noise and focus on fundamentals stand to profit handsomely. Now is the time to position for palm oil’s resurgence—before the market catches up.

The upward trajectory aligns with regulatory tailwinds—ignore the short-term swings and bet on the trend.