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Malaysia's Palm Oil Production Set for Surge as Labor Shortage Eases and Favorable Weather Boosts Harvest

5 Jun 2023 9:39 pm
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New Delhi, 5 June (Commoditiescontrol):Palm oil supply in Malaysia is expected to experience a significant surge as the labour shortage in the country eases, according to a senior plantation executive. Sudhakaran Nottath Bhaskaran, the plantations director at IOI Corp, has stated that the return of foreign workers to the plantations has accelerated harvesting activities, while improved oil extraction rates have boosted crude palm oil production. Additionally, favourable rainfall over the past two years has contributed to the increased formation of fresh fruit bunches, further enhancing the outlook for palm oil production in Malaysia.
Sudhakaran expressed optimism about the upcoming months, stating, "Palm oil production is going to pick up speed from now onward until it reaches a peak around August to September. Crops are rapidly growing, and we expect a very strong peak this year." Malaysia is the world's second-largest palm oil producer, accounting for over 20% of global palm oil production. However, despite easing Covid-related movement restrictions, the country has faced challenges in bringing back overseas workers, who are crucial for the industry.
The improved production outlook has put downward pressure on palm oil prices, which have been trading at a 30-month low after reaching record highs last year. Sudhakaran anticipates that output in Peninsular Malaysia and Sabah, which together contribute nearly 80% of Malaysia's total palm oil supply, will increase by at least 25% in the second half of the year compared to the same period in 2022. The rise in yields is already evident, with total Malaysian production expected to climb by approximately 18% in May compared to the previous month.
The return of overseas workers is a welcome relief for palm oil plantation companies in Malaysia. Last year, the estates suffered an estimated loss of RM20 billion due to chronic labour shortages. IOI Corp, the country's second-largest palm oil planter, operates 96 estates in the northern Borneo region of Sabah and Peninsular Malaysia. With an adequate workforce, the company has improved its harvesting rounds to once every 10 to 15 days, a significant improvement compared to the 45 to 60-day intervals observed last year.
While the industry remains cautious about the potential impact of an El Niño weather event later this year, Sudhakaran believes it will likely be experienced only from September or October onward. He expects minimal immediate impact on production, stating that any effect on palm yields may only become apparent in six to nine months and again in 20 to 22 months, depending on the severity of the drought. The industry will continue to monitor the situation closely as it develops.

(By Commoditiescontrol Bureau; +91-9820130172)


       
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