Global palm oil demand to fall by 4% on pandemic impact

by BERNAMA / pic by RAZAK GHAZALI

THE global demand for palm oil is expected to contract by 4% or 3.2 million tonnes due to the impact from Covic-19, which has mainly affected the food sector, said Malaysian Palm Oil Council (MPOC).

According to global statistics for 2019, the demand for palm oil stood at 71.48 million tonnes, followed by soybean oil (55.46 million tonnes), rapeseed oil (27.62 million tonnes), sunflower seed oil (19.33 million tonnes), palm kernel oil (8.56 million tonnes) and peanut oil (6.12 million tonnes).

Regional manager Desmond Ng said China’s catering industry had been adversely affected by the pandemic and its cumulative income has dropped by 23.9% as of September.

Speaking at the MPOC’s webinar series titled “China’s palm oil demand and recovery post-pandemic”, Ng noted that the slow demand was expected due to the health crisis that had disrupted the whole supply chain.

As for the plantation industry, he said the pandemic had somewhat contributed to lower production when air travel was prohibited and foreign workers were not allowed to resume work in the plantation area.

It was reported that Malaysia is losing up to 25% of its potential palm oil yield due to the labour shortage.

As the world’s second-largest palm oil producer, Malaysia relies on workers from countries such as Indonesia and Bangladesh, where they account for 84% of its plantation workforce.

Besides the labour shortage, palm oil production is also facing slower growth due to the rainy season, a drop in fertiliser application, the decline in replanting activities and ageing palm trees, said Ng.

On the bright side, he said the implementation of the biodiesel B30 mandate may prove to be a saviour for the time being, but voiced his concern on the slow pace of the implementation.

He also noted that other major palm oil-importing and consuming countries are also facing a double reduction in imports and consumption this year.