Malaysia's Palm Oil Production Declines Due to December Rainfall

As harvesting in the world's second-largest producer of the tropical oil is hampered by excessive rainfall, Malaysia's palm oil production is expected to decline for the fourth consecutive month in December. According to the sources…

Malaysian inventories would be reduced by lower output, which would also raise benchmark futures, which are already close to their highest levels in roughly two and a half years.

Ahmad Parveez Ghulam Kadir, director-general at the Malaysian Palm Oil Board (MPOB), said, "We estimate a potential reduction of around 5 percent to 8 percent in crude palm oil (CPO) production under normal circumstances."

Torrential rains have pounded southern Thailand and Peninsular Malaysia, especially its northeastern coast, causing flooding that has killed dozens of people and damaged hundreds of acres of rice fields, residences, and transportation infrastructure.

Some east coast regions received more than six months' worth of rainfall between November 26 and 30, according to Malaysian Prime Minister Anwar Ibrahim, who stated the rains were much greater than anticipated.

The board stated that Malaysia's CPO (Crude Palm Oil) production fell 9.8% from the previous month to 1.62 million metric tons in November, the lowest amount for the month since 2020.

Harvesting and moving fresh fruit bunches from estates to mills may become more challenging if heavy rains further deteriorate plantation infrastructure, such as roads and bridges.Kadir said.

Due to limited supply, palm oil is currently trading at a premium above its competitors, soybean and sunflower oils, which are often sold at a discount.