The Malaysian Palm Oil Board (MPOB), the statutory body overseeing the regulation, research and development of the country’s palm oil industry, will roll out an official used cooking oil (UCO) reference price in the first quarter of 2026.
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It says the move is aimed at improving market transparency, guiding fair trading, and strengthening the development of a circular palm oil economy.
UCO refers to oils and fats collected from restaurants, food processors and households after cooking or frying. It is a key feedstock for biofuels, particularly sustainable aviation fuel (SAF), which is increasingly seen as critical to aviation decarbonisation.
UCO is increasingly important for downstream applications, particularly in biofuels and palm-based chemical products, and the benchmark is expected to provide clearer price signals while protecting smaller market participants from price manipulation and misinformation, Malaysia’s Plantation and Commodities Minister Noraini Ahmad said.
“The initiative supports Malaysia’s push towards a circular economy, where waste and by-products are converted into valuable industrial and energy resources,” she was quoted as saying by New Straits Times.
MPOB director general Datuk Dr Ahmad Parveez Ghulam Kadir added that the reference price is based on the local delivered price, reflecting UCO sold within Malaysia and including local transport costs, rather than export-based free on board (FOB) pricing.
“It (the reference price) is to make it more transparent, so that people have a reference whenever they would like to sell whatever UCO they have collected. This will help ensure that they get a good price and that the market is more regulated, so people are treated fairly and not cheated,” he was quoted as saying by The Edge Malaysia. “Basically, we want to make sure it becomes a healthy business, that people are more interested, and that more people are encouraged to collect and sell.
UCO collection in the country is carried out by licensed operators sourcing from restaurants, food processors and households, before being traded domestically or exported as a feedstock for biofuels and oleochemical production.
In Malaysia, UCO is traded via the US Dollar Used Cooking Oil FOB Straits (Platts) Futures (FUCO) contract on Bursa Malaysia Derivatives, standardised at 25 metric tonnes per lot. In 2025, prices ranged from US$903.50/tonne to US$1095/tonne, with an average level of US$941.46/tonne.
Other key UCO benchmark prices used in Asia include S&P Global’s Platts Asia Used Cooking Oil (UCO) Price Assessments, Argus Asian UCO price assessments and Vesper’s benchmarks for China. As of December 17 last year, S&P Global assessed UCO prices at US$1,060/tonne for FOB Straits, US$977/tonne for DAP Tianjin and US$1,029/tonne for North Asia.
Last year, prices of used cooking oil in Asia hit a two-year high due to stronger demand in Chinese and European markets, S&P Global Commodity Insights reported. Platts data showed UCO North Asia reaching US$1,015 per metric tonne (FOB China) on Jan 23, its highest level since US$795 per metric tonne on Nov 14, 2023, while UCO FOB Straits rose to US$1,010 per metric tonne, up from US$790 per metric tonne on Nov 3, 2023.
Palm oil sustainability
The initiative comes as Malaysia’s palm oil industry, the world’s second largest producer after Indonesia, recorded its highest-ever amount of crude palm oil (CPO) produced in 2025. Palm oil output reached 20.28 million tonnes in 2025 but is expected to moderate to between 19.5 million to 19.8 million tonnes this year, The Edge Malaysia cited MPOB director-general Datuk Dr Ahmad Parveez Ghulam Kadir as saying.
Palm oil is the most widely used edible vegetable oil in Malaysia, according to data from the plantations ministry.
Noraini said the average crude palm oil (CPO) price rose by 2.7 per cent to RM4,292 (US$1,058) per tonne in 2025, from RM4,179 (US$1030) per tonne in 2024. Export revenue from palm oil and palm-based products is expected to exceed RM100 billion, with CPO production approaching 20 million tonnes, reflecting sustained efforts across the value chain, she added.
The palm oil sector contributed 2.88 per cent to Malaysia’s gross domestic product in the first nine months of 2025. However, Noraini said the industry’s long-term competitiveness will hinge on higher yield, stronger sustainability assurance and faster adoption of innovative solutions.
She added that the country must strengthen carbon footprint measurement and life-cycle assessments to show that locally produced palm oil has a lower carbon intensity than other vegetable oils, as global markets continue to scrutinise the industry by setting stricter sustainability and traceability requirements under regulations such as the European Union Deforestation-free Regulation (EUDR).
To this end, the government has set aside RM65 million (US$16 million) to reinforce international confidence in Malaysian palm oil through sustainability, certification and compliance initiatives in 2025. Noraini noted that global demand for palm oil remains steady, driven by population growth and broader adoption in food, industrial and biofuel uses across key markets.
“Malaysia’s outlook remains positive, and the priority now is to strengthen productivity, sustainability and adaptability together,” she said.
