KUALA LUMPUR: The oil palm plantations that have been inundated with rain this year aren’t likely to see production recover for at least another month, according to a senior industry official.
The situation has already tightened supplies in the global market, which is headed for a back-to-back drawdown in stockpiles, lifting futures nearly 9% so far this month.
The flooding has submerged farms and forecasters are expecting more rain, further squeezing supplies of the world’s most-consumed edible oil just as buyers restock for a major Muslim festival.
“The recent floods in Malaysia will impact palm oil production in 2025, particularly in the first quarter,” said Malaysian Palm Oil Board director general Datuk Ahmad Parveez Ghulam Kadir.
Waterlogged farms and harvesting disruptions will likely result in lower fresh fruit bunch output and reduced oil extraction rates in the short term, he said.
January production in the South-East Asian nation slumped the most in nine years as heavy rainfall and flash floods in major palm areas crippled operations.
Sarawak and Sabah, the top growing states, were among the worst hit, according to the country’s weather agency. That spurred a more than 7% drop in stockpiles from a month earlier, missing all estimates in a Bloomberg survey.
The situation will help keep prices elevated. The tropical oil closed at RM4,664 a tonne last Friday. — Bloomberg
