Agri Commodities Preview: Malaysia Palm Oil Production To Increase 21 Million Tons In MY 2018/19

As per the official sources, Malaysias palm oil production for For 2017/18 is forecast to reach 20.5 million tons an increase of 8.7% from 18.8 million tons recorded in 2016/17. The use of high yield seedlings contributed to this growth, as new planted areas has not expanding much for the last few years. With fewer weather anomalies recorded in the last 12 months, production of palm oil for the remaining calendar year of 2018 set to be in recovering mode as before the 2016/17 season.

According to the industry, it needs 300,000 manual labors to ensure palm plantations operate at optimal levels. Sarawak State government moratorium on new plantation areas is still enforced, and most of the new areas recorded are from conversion of non-productive rubber tree plantation areas. As the labor issue remains the limiting factor, production for 2018/19 is forecast to increase slightly to 21.0 million tons. The increase is attributed to high oil extraction rate from fruits collected as the total tonnage of Fresh Fruit Bunches (FFB) collected is forecasted to slightly drop.

Export for 2018/19 is forecast to increase slightly to 17.9 million tons as price of palm oil is projected to stabilize, and GOM manages to control stock levels at around 2.9 million tons. Stiff competition from other oilseeds, namely soybean, limits growth of palm oil export. Based on information from the industry, stiff competition from Indonesia saw some of palm oil producers in Indonesia has been offering discount factor of more than $ 50 per ton in relative to Malaysian palm oil in expanding their export market share.