Malaysia palm output sinks most in nine years as rains hit crops

Palm oil production in Malaysia slumped the most since 2016 as heavy rains and floods disrupted harvesting in the world’s second-biggest grower.

At least five people were killed and thousands forced to move to safer places last month after days of heavy downpour triggered floods and landslides in several areas of the South-east Asian nation. The states of Sarawak and Sabah, top oil palm growing areas, were among the worst affected, according to a statement from the country’s weather agency.

Shrinking supplies in Malaysia could further support benchmark palm oil prices that gained more than five per cent in Kuala Lumpur last week. The market is also likely to be underpinned by recent price moves that caused the tropical oil to become cheaper than rival soybean oil, after commanding a rare premium from September last year until January. Palm jumped as much as 1 per cent on Monday (Feb 10).

Stockpiles dropped 7.6 per cent to 1.58 million tonnes, missing all analyst estimates in the survey. Exports decreased almost 13 per cent to 1.17 million tonnes, slightly better than the survey prediction.

Malaysian reserves slipping below 1.6 million tonnes is an acknowledgement of a bullish palm oil market, said Anilkumar Bagani, the head of research at Mumbai-based Sunvin Group.

Tags: stockpiles, benchmark prices, floods, heavy rains, Production, Malaysia, palm oil, output, Market