KUALA LUMPUR, 12 January 2023 – Malaysia’s oil palm industry will continue its impressive performance this year supported by strong demand for the commodity and higher production of crude palm oil (CPO).
Director-General of Malaysian Palm Oil Board (MPOB) Datuk Dr Ahmad Parveez Hj. Ghulam Kadir said the export of palm oil is expected to increase 3.7 per cent to 16.30 million tonnes in 2023 from 15.72 million tonnes last year, attributed to expected ongoing palm oil demand from importing countries.
He said 2022’s 15.72 million tonnes exports of palm oil increased marginally by one per cent compared to 15.57 million tonnes due to higher demand, especially from UAE, Saudi Arabia, Japan, Bangladesh and Egypt.
He foresees production to rise by three per cent to 19 million tonnes in 2023 from 18.45 million tonnes in 2022 following an expected increase in the mature planted area especially in Peninsular Malaysia and Sarawak, expected better weather conditions as well as labour situation which is foreseen to stabilise as the application for foreign workers has been approved in stages.
The 2022’s 18.45 million tonnes production is 1.9 per cent higher compared to 18.12 million tonnes in 2021 and this was due to higher fresh fruit bunches (FFB) processed by 3.4 percent arising from better FFB yield performance by 0.1 per cent to 15.49 tonnes per hectare.
According to Datuk Dr Ahmad Parveez, the price of CPO in 2023 is expected to range between RM4,000 and RM4,200 per tonne compared to RM5,087.50 per tonne in the previous year.
“The key drivers that will influence the prices of CPO are labour availability which is still an issue, lower sunflower seed production from Ukraine due to ongoing war with Russia and higher imports of palm oil by China as it loosens its COVID-19 rules,” he said in his presentation titled “The Malaysian Palm Oil Industry Performance 2022 and Prospects for 2023” at the Review and Outlook Seminar 2023, here today.
“Other factors include Indonesia’s production of CPO is questionable, its biodiesel mandate to B35 and its tightened export policy,” he said.
Datuk Dr Ahmad Parveez said that effective 1 January 2023, Indonesia has tightened its export policy for palm oil to keep more domestic supply and less for exports to ensure ample palm oil for festive seasons as production is expected to be seasonally weaker in the first quarter of this year.
“Effective 1 February 2023, Indonesia will impose a higher biodiesel blending mandate, B35 from B30, and hence will increase domestic consumption of palm oil. These latest policy changes would further restrict the global palm oil supply.
Hence, demand for Malaysian palm oil is expected to rise which will eventually assist in reducing higher domestic palm oil stocks,” he said
According to him, concerns over soybean supply risks due to dry weather patterns in Argentina and southern Brazil which is severely impacting crops is another factor that will influence the prices of the Malaysia CPO.
“Even though there are several signals that dry weather in South America is improving, it may be too late in the season at this point to salvage some crops,” he said.
Datuk Dr Ahmad Parveez also said that Malaysia’s palm oil stock is foreseen to slip 8.7 per cent to two million tonnes in 2023 from 2.19 million tonnes last year due to the expected increase in export demand, especially from major importing countries.
The closing stock of palm oil which amounted to 2.19 million tonnes last year was higher by 35.9 per cent compared to 1.61 million tonnes recorded in December 2021.
“This was due to higher CPO production by 0.34 million tonnes or 1.9 per cent and higher palm oil opening stock by 0.35 million tonnes or 27.6 per cent,” he said.
He added that, for the whole of Malaysia, the monthly net income of independent smallholders based on average farm ownership is RM2,634. Sabah recorded RM4,394, Sarawak registered RM3,189 while Peninsular Malaysia stood at RM2,150.
— Akses Malaysia