By Ashley Tang and Rajendra Jadhav
KUALA LUMPUR/MUMBAI (Reuters) – Malaysia's palm oil production is expected to fall for a fourth consecutive month in December as heavy rains hit harvests in the world's second-largest producer of palm oil. ' tropical oil, the industry regulator told Reuters on Friday.
Lower yields in Malaysia would curb investments in the country and further boost benchmark futures, which are already near their highest levels in about 2-1/2 years.
“We estimate a potential reduction of around 5% to 8% in crude palm oil (CPO) production under normal conditions,” said Ahmad Parveez Ghulam Kadir, director general of the Malaysian Palm Oil Board ( MPOB).
“However, if major floods continue, the reduction could reach as high as 10% to 20%,” he said.
Peninsular Malaysia, especially the northeast coast, and southern Thailand have been hit by heavy rains that have caused floods that have killed dozens of people, and damaged homes, transport links, and thousands of acres of rice crops.
Malaysian Prime Minister Anwar Ibrahim said the rains were much higher than expected, with some areas of the east coast receiving more than six months of rain between November 26 and November 30.
In November, Malaysia's CPO production declined 9.8% from a month ago to 1.62 million metric tons, the lowest for the month since 2020, the board said earlier this week.
The Malaysian Meteorological Department (MET) said on Friday that a few states may experience continuous rainfall from December 16 to 19.
The MPOB is closely monitoring the situation as the MET has forecast a second wave of flooding due to heavy rain, said Kadir.
Heavy rains could further damage plantation infrastructure, such as roads and bridges, making it difficult to harvest and transport fresh fruit bunches from estates to mills, he said.
In December 2023, Malaysia will harvest 1.55 million tons of CPO, but production this December could be much lower than last year, said a Malaysian palm oil producer, who did not want to be named.
Palm oil usually trades at a discount to soybean oil and sunflower oil, but is currently at a premium over these competing oils due to limited supply.
(Reporting by Ashley Tang and Rajendra Jadhav; Editing by Eileen Soreng)
Source link
