Heavy rains will hit Malaysia’s palm oil production again in December – MPOB

Malaysia’s palm oil production in December is expected to fall for a fourth straight month as heavy rains affected the harvest in the world’s second-largest tropical oil producer, an industry regulator told Reuters on Friday.

A cut in Malaysia’s production would reduce the country’s stockpiles and further boost futures for the major crude, which are already near their highest levels in 2.5 years.

“We estimate a potential reduction in crude palm oil (CPO) production of around 5-8% under normal circumstances,” said Ahmad Parviz Ghulam Kadir, director general of the Malaysian Palm Oil Board (MPOB). “However, if severe flooding persists, the reduction could be 10% to 20%,” he said.

Peninsular Malaysia, especially its northeast coast, and southern Thailand have been hit by heavy rains that have caused floods that have killed dozens of people, damaged homes, transportation routes and thousands of acres of rice crops. Malaysian Prime Minister Anwar Ibrahim said the rains exceeded expectations, with some parts of the east coast receiving more than six months of normal rainfall between November 26 and 30.

Malaysia’s CPO production in November fell 9.8% from the previous month to 1.62 million tons, the lowest monthly output since 2020, the board said earlier this week.

Palm oil is usually sold at a discount compared to soybean and sunflower oil, but it is currently priced higher than these competing oils due to tight supplies, leading to a price inversion.

Tags: Malaysia, palm oil