PETALING JAYA: The plantation sector will likely see the impact of the hot and dry weather spell more towards the later part of 2024, but total production of the year will likely be higher year-on-year (y-o-y), helped greatly by the availability of adequate supply of labour to the sector.

Datuk Dr Ahmad Parveez Ghulam Kadir, director-general of the Malaysian Palm Oil Board (MPOB), told Starbiz the heat spell driven by the El Nino phenomenon became severe in the fourth quarter of last year (4Q23) and extended into 1Q24, adding that the impact of the weather phenomenon on oil palm yield is not immediate.

“The effect varies based on the severity of the event, with strong El Nino events often impacting yields significantly, while weak-to-mild events typically do not.

“The recent El Nino event, which strengthened at the end of 2023 and continued through early 2024, is considered strong and is expected to affect fresh fruit bunch (FFB) production by the end of 2024,” he said.

Despite that, crude palm oil (CPO) production is projected to continue to increase by 1.1% in 2024 to about 18.75 million tonnes, up from 18.55 million tonnes in 2023 and 18.45 million tonnes in 2022.

This growth in total production will be supported by the improvement in labour availability for the sector and better fertiliser application, he said.

Lower fertiliser prices compared to previous years have made it more affordable for farmers to apply the necessary nutrients to their crops, enhancing growth and yield.

“While weather conditions, particularly the ongoing effects of El Nino, will certainly influence production levels, the industry’s resilience and adaptive strategies play a crucial role.

“The combination of improved labour conditions and effective fertiliser use helps mitigate some of the adverse effects of El Nino, supporting a modest increase in production,” Ahmad Parveez explained.

Fundamentals for the sector remain strong. In May, CPO production hit 1.7 million tonnes, which was 13% higher month-on-month (m-o-m) and 12% higher y-o-y, which was above analysts’ expectation.

Ahmad Parveez said the improved labour situation ensures that harvesting and other crucial activities are conducted efficiently and on time, which is vital for maintaining and boosting CPO production.

Any negative weather impact was also neutralised partly by the lower fertiliser cost, which made it more feasible for planters to apply adequate amounts of fertilisers and are essential for the growth and yield of oil palms.

Better fertilisation application can help increase production, despite the challenges posed by the weather factor, he said.

Year-to-date, CPO production increased by 9.4% y-o-y to 7.26 million tonnes, offsetting the increases in exports that grew by 6.7% y-o-y to 6.3 million tonnes.

Production growth is set to continue. MIDF Research noted that although the mild El Nino peaked in April, the mixed dry-wet weather might be prolonged up to July, thereby improving estate activity ahead, particularly in terms of FFB evacuation processes and manuring activities.

The research firm expects CPO production to maintain its momentum in the remaining months, reaping the benefits of fertiliser application over the past two years.

RHB Research meanwhile stated with weather conditions having normalised since April to May in Indonesia, production in the world’s largest CPO producer should start to pick up in the coming months.

Indonesian planters continue to expect to see flattish-to-moderate output growth of 0-5% in 2024, it added.

From a CPO price perspective, the May MPOB data also showed exports for the month of 1.38 million tonnes were up 12% m-o-m and 28% higher y-o-y, which helped ensure stock levels growth saw a marginal increase to 1.75 million tonnes (up 1% m-o-m, 4% y-o-y) as increased domestic usage helped as well.

What’s important for planters is the palm oil exports are starting to show a rebound with destination markets seeking to shore up depleted edible oils stock levels.

The outlook for the April to June 2024 period suggests a rebound in imports by India, China and Pakistan, driven by the improved price competitiveness of palm oil after price rallies in competing vegetable oils like sunflower.

Indian importers are capitalising on the lower export prices available on the global market, following a significant reduction in its domestic stocks during 1Q24.

“This trend is expected to bolster India’s palm oil imports in the coming months. Similarly, China has begun to incrementally increase its imports of palm oil, soyoil and rapeseed oil to replenish its reduced stocks. This strategic move aims to stabilise the domestic market and ensure sufficient supply,” Ahmad Parveez said.

He believes that demand from these key markets will continue, thereby firming the price of CPO.

Furthermore, the current high crude oil prices at above US$80 a barrel are expected to further boost demand for palm oil, which in turn will support CPO prices.

Buyers may be having other ideas. Cargo surveyors Intertek and Amspec estimated palm oil exports for the first 10 days of

June had decreased by 20.4% and 21.6% m-o-m to 295,000 and 285,000 tonnes, respectively. This will likely pressure prices.

“We expect CPO prices to weaken over the next six-to-12 months on rising output. The key risk is a strong La Nina, which could affect global vegetable oil output and support prices. A mild La Nina could be positive for palm oil output, especially in Indonesia which has suffered due to El Nino last year.

“Indian buyers are price-sensitive and we think they may wait for prices to correct,” said Akash Gupta, director of credit research and analysis at Fitch Ratings.

TA Research noted Indonesia had implemented a reduction in palm oil export tariff in June, setting the reference price for CPO in June at US$778.82 per tonne, down from US$877.28 a tonne in May.

This adjustment would reduce the export tax for CPO to US$18 per tonne and the levy to US$75 a tonne, resulting in a reduction of export costs by US$49 per tonne compared to the previous month.

“We anticipate this may pose a threat to Malaysian palm oil exports, which are losing export competitiveness. If the production were to maintain its robust growth momentum, it would lead to resurgent palm oil stockpiles, which would potentially limit the CPO price increase,” the research house noted in a sector report.

It expects CPO prices in the coming months to be influenced by both palm oil production in Malaysia and Indonesia and weather patterns in the primary soybean-growing regions of Brazil and Argentina, where the La Nina weather could leave its mark the most.

TA Research added the US Department of Agriculture estimated global soybean production is set to hit a new record of 422.3 million tonnes, up some 25.3 million tonnes from 2023 and 2024 due to expanded planted acreage and average yield improvements.

Global soybean ending stocks for 2024 and 2025 are estimated at 128.5 million tonnes, up some 16.7 million tonnes from the previous year.

As such, MPOB anticipates firm CPO prices in 2024, ranging between RM3,900 and RM4,200 per tonne, helped by demand from key markets.

The benchmark three-months forward CPO futures contract on Bursa Malaysia Derivative yesterday last closed at RM3,930 a tonne, up RM14 for the day. CPO has been trading range bound between RM4,500 to RM3,500 in the past 23 months.


Sumber : The Star

MALAYSIAN palm oil producer Johor Plantations Group (JPG) and a shareholder expect to raise about RM735 million (S$211 million) in an initial public offering (IPO), putting the group on track to execute the country’s biggest listing in over two years.

JPG kicked off its IPO on Wednesday (Jun 12) with an offering of up to 875 million shares, representing a 35 per cent stake in the company, according to terms of the deal seen by Bloomberg News. The IPO exercise values the palm oil firm at RM2.1 billion.

The share sale is set to be the largest in Malaysia since Farm Fresh’s US$240 million offering in March 2022, data compiled by Bloomberg show. JPG’s parent – Kulim Malaysia, the plantations arm of Johor Corp, the development and investment business of the Johor state government – is also offering shares in the IPO, and will retain a 65 per cent stake in the company after the listing.

“We intend to diversify to meet our future growth aspirations by becoming a fully integrated palm oil producer through our venture into the downstream segment, which focuses on speciality oils and fats,” JPG managing director Mohd Faris Adli Shukery said in Kuala Lumpur.

Malaysia is the world’s biggest palm oil producer after Indonesia. JPG will be Johor Corp’s second unit to be publicly listed after healthcare division KPJ Healthcare, which is valued at RM8.56 billion.

The IPO comes as benchmark prices for palm oil traded in Kuala Lumpur disappoint analysts due to lukewarm demand. A strong US dollar, a tepid Chinese economy and concerns of a robust recovery in supplies from the world’s biggest growers have contributed to the weakness. Still, prices may be supported as adverse weather lowers yields.


Sumber : The Business Times

SINGAPORE: Malaysian palm oil futures rose Tuesday, reversing midday losses, as lower rapeseed projections overshadowed U.S. soybean ratings, which were as expected.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed up 14 ringgit, or 0.36%, to 3,933 ringgit ($833.79) a metric ton.

In its first production estimates for this year’s harvest, France’s farm ministry projected the winter rapeseed crop at 4.2 million tons, down 1.2% from 2023.

Dalian’s most active soyoil contract slid 1.7%, while its palm oil contract lost 2.69%. Soyoil prices on the Chicago Board of Trade slipped 0.48%.

The USDA’s soybean crop ratings were in line with trade expectations. Soybean conditions were rated 72% “good-to-excellent” in the USDA’s first ratings of 2024 for the oilseed.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

While a weak ringgit is currently supporting palm oil prices, lower Malaysian exports expected in June have “capped the gains for upside” in the near term, said Mitesh Saiya, trading manager at Mumbai-based trading firm Kantilal Laxmichand & Co.

Palm gains on firm crude but logs weekly decline

Cargo surveyors Intertek Testing Services and AmSpec Agri said exports of Malaysian palm oil products for June 1-10 fell 20.4% and 21.6%, respectively, compared to May 1-10.

Cargo surveyor Societe Generale de Surveillance, however, estimated exports for June 1-10 at 347,045 tons, up 31.8% from 263,369 tons shipped during May 1-10.

The ringgit, palm’s currency of trade, strengthened 0.04% against the dollar after declining 0.66% on Monday.

Palm oil may fall this week towards the support levels of 3,850-3,870 ringgit per ton, with resistance at 3,980-4,000 ringgit, LSEG said in a report.3 technologies identified to boost palm oil production, cut reliance on foreign labour


Sumber : Business Recorder

KUALA LUMPUR (June 11): Malaysia’s stockpile of palm oil may continue to swell in the coming months on seasonal strength in production and weigh on prices, analysts cautioned.

At least seven research houses maintained their neutral view on the plantation sector following the release of palm oil stocks data by the Malaysian Palm Oil Board (MPOB) that showed a 0.5% month-on-month expansion in inventory for May.

Output will likely peak at the end of June or by the third quarter, supported by improving weather conditions and productivity, BIMB Securities said. Demand could be subdued as palm oil is still trading at a small discount against more expensive substitute soybean oil, the research house said.

Prices of the edible oil used in everything from lipstick to diesel have climbed about 5% so far this year as poor weather conditions in key producing nations Malaysia and Indonesia stoked concerns over output and potential tightening in supply.

The benchmark palm oil contract for August delivery was trading at around RM3,887 per tonne on Bursa Malaysia Derivatives on Tuesday. However, prices are down 12% from a high of RM4,407 per tonne on April 3.

Further, strong shipments in May are at risk from Indonesia's move to cut palm oil-related tariffs in June, which will reduce the export tax to US$18 (RM84.99) per tonne and the levy to US$75 per tonne. All in all, the move could lower export costs by US$49 per tonne compared to the previous month.

Malaysia is losing competitiveness in palm oil exports, TA Securities warned. If production stays at its current robust pace, it would lead to burgeoning palm oil stockpiles and potentially limit the upside, the research house said.

TA Securities would also review its current forecast for crude palm oil to average RM4,000 per tonne in 2024 if South America's soybean supply turns out to be lower than expected, demand recovers more meaningfully, and production costs fall significantly.

MPOB data released on Monday showed palm oil inventory totalling 1.75 million tonnes in May in the world’s largest palm oil producing nation after Indonesia, as higher exports and domestic consumption were more than offset by higher output.

Production surged 13.5% from April to 1.70 million tonnes in May, the biggest in six months. Exports, meanwhile, rose to a six-month high of 1.38 million tonnes, up 11.66% from April, the MPOB said.

For strategy, MIDF Amanah Investment Bank said now is the best time for investors to lock in profits for its top picks, such as Ta Ann Holdings Bhd (KL:TAANN) and IOI Corp Bhd (KL:IOICORP), "as we anticipate the increase in share price will gradually decline towards the end of the quarter”.

TA Securities, BIMB, and MIDF have a ‘neutral’ outlook on the sector.


Sumber : The Edge Malaysia


Malaysia has announced a plan to send orangutans to its major palm oil trading partners, in an effort to demonstrate its dedication to conserving the endangered species – but the strategy is being called out before it’s even begun.

The announcement was made by Malaysia’s Plantation and Commodities Minister Johari Abdul Ghani at a biodiversity forum that took place in early May. Though the precise details of the plan aren’t yet clear, it would involve sending orangutans as a “gift” to countries that import palm oil.

“By introducing 'orangutan diplomacy', it directly proves to the world community that Malaysia is always committed to biodiversity conservation,” Ghani later wrote on X, likening the plan to China’s “panda diplomacy”. Much like China is the only place in the word where wild pandas live, orangutans are only found in Borneo and Sumatra. 

“Malaysia cannot take a defensive approach to the issue of palm oil, instead we need to show the countries of the world that Malaysia is a sustainable palm oil producer and is committed to protecting forests and environmental sustainability,” he continued.

Palm oil is pretty much everywhere; according to the World Wildlife Foundation (WWF), it’s in nearly 50 percent of the packaged products found in grocery stores, from foodstuffs like chocolate and pizza to the shampoo and lipstick found in the health and beauty aisle. 

However, the demand for palm oil has also led to large-scale deforestation on the island of Borneo (partly governed by Malaysia), home to the Bornean orangutan. Considered as a critically endangered species, its continuing decline has largely been attributed to the destruction of its forested habitat.

In an effort to combat deforestation and the loss of biodiversity that comes with it, the European Union (EU) last year introduced a law to end the import of products containing palm oil – amongst other commodities – that comes from deforested land. Malaysia, the second-biggest exporter of palm oil in the world, called the law “unjust”.

With Ghani suggesting the EU could be in line to receive an orangutan, the diplomacy plan could be seen as a response to the law’s introduction.

However, the newly announced plan hasn’t gone without criticism.

“It is obscene, repugnant and extraordinarily hypocritical to destroy rainforests where orangutans live, take them away and give them as gifts to curry favor with other nations,” said Stuart Pimm, chair of conservation ecology at Duke University, speaking to CNN. “It totally goes against how we should be protecting them and our planet.”

WWF-Malaysia also released an op-ed in response to the plan, suggesting it wasn’t the best way to go about protecting the species and tackling declining biodiversity.

“WWF-Malaysia is of the opinion that a more effective way for biodiversity and orangutan conservation is through improving forest management, prioritising in-situ orangutan conservation, supporting sustainable palm oil production, and increasing international fundings for conservation efforts in developing countries,” the piece reads.

“Rather than sending orangutans abroad, this approach ensures the survival of the species and promotes responsible conservation practices and sustainable production.”


Sumber : IFLScience