THE Malaysian oil palm industry sees a brighter performance this year, which may continue into 2023, supported by stronger demand for the commodity, the Malaysian Palm Oil Board (MPOB) said. 

DG Datuk Ahmad Parveez Ghulam Kadir (picture) said the ongoing Russia-Ukraine conflict has disrupted the sunflower oil supply chain globally, causing a surge in the demand for palm oil as a replacement for sunflower oil. 

The rising prices of soybean oil and Brent crude oil in the world market are also contributing factors that may impact the performance of palm oil, he said. 

“As such, we expect the price of crude palm oil (CPO) to average at RM5,100 a tonne for this year (2022), 15.7% higher compared to RM4,407 a tonne in 2021,” he said in a statement last Friday. 

The average CPO price for January-November 2022 was RM5,167 a tonne, an increase of 18.4% from RM4,363 a tonne in the same period in 2021. 

CPO prices saw a decline at the beginning of the third quarter of this year due to high production season, rising palm oil stocks, and declining soybean oil prices. 

Hence, MPOB foresees the CPO price to stabilise and average at RM3,800 a tonne in 2023. 

This is in anticipation of higher palm oil production, improvement in weather conditions, especially in the second half of this year, and expectation of higher availability of supply of other major vegetable oils. 

Meanwhile, soybean oil prices which are expected to be low due to the high production in Brazil and the US may also impact the CPO price. 

“Additionally, the strengthening of the ringgit against the US dollar may also affect the price of the CPO,” Ahmad Parveez explained. 

Exports of palm oil rose slightly by 0.8% to 14.25 million tonnes in January-November 2022 compared to 14.14 million tonnes in the previous corresponding period. As such, palm oil export revenue surged 31% to RM80.22 billion from RM61.26 billion in the same period in 2021. 

Ahmad Parveez also said that CPO production is expected to increase slightly by 2.1% to 18.5 million tonnes last year from 18.12 million tonnes in 2021. 

“We expect a slow recovery in palm oil production due to the labour shortage issue in oil palm plantations, especially for fresh fruit bunch (FFB) harvesting and unloading activities. 

“CPO production is projected to further increase to 19 million tonnes in 2023 due to the expected increase in productive areas, especially in Peninsular Malaysia and Sarawak,” he said. 

CPO production for January-November 2022 stood at 16.83 million tonnes compared to 16.67 million tonnes achieved in the same period in 2021, attributed to an increase in processed FFB to 86.51 million tonnes in January-November 2022 compared to 84.17 million tonnes previously. 

“In anticipation of higher production, we expect the closing stocks of palm oil in 2022 at 1.85 million tonnes, up 0.24 million tonnes or 14.9% from 1.61 million tonnes in December 2021.” 

According to Ahmad Parveez, palm oil closing stocks are projected at two million tonnes in 2023, higher than that in 2022, due to the expected higher supplies of other major vegetable oils including palm oil. — Bernama

• This article first appeared in The Malaysian Reserve weekly print edition