Indonesia: Good weather expected to bolster Indonesia, Malaysia palm output

  • Crop-friendly weather over the last few months in top palm oil producers Indonesia and Malaysia will help drive up output of the edible oil, traders and industry players said, underscoring forecasts of record production for 2019.
  • But reduced usage of fertilizer, labor shortages and older trees in Malaysia could limit growth in output of the commodity, used in products ranging from soap to biofuels.
  • Record production from the two Southeast Asian countries, which account for over 80% of global output, would pressure benchmark prices that recently came off seven-month highs.
  • Malaysian output stood at 19.5 million tonnes in 2018, and charted its highest production on record at 19.96 million tonnes in 2015, according to data from industry regulator the Malaysian Palm Oil Board.
  • The Indonesia Palm Oil Association saw 2018 output at 42 million tonnes, while the estimate for 2017 was 36.5 million tonnes.
  • A return to more regular harvesting is also set to stoke output gains in 2019, after delays in 2018 when some mills were struggling to process record inventories of crude palm oil.
  • In Malaysia, factors like an older age-profile for its trees, a labor shortage and a lack of new planting area are also expected to limit output-growth, said analysts, although younger trees and maturing areas in Indonesia will help make up for that.
  • “There is improving quality of palm plantations, and also a younger tree age-profile in Indonesia,” said a Singapore-based trader.

External Link: