![Malaysia’s palm oil production down further in December [World News]](https://foodcom.pl/wp-content/uploads/2023/09/Foodcom_World_News_Industrials-1520x760.jpg "Malaysia’s palm oil production down further in December [World News]")
- Palm oil production in Malaysia has been declining for the past four months due to heavy rains and floods hitting the country.
- Production in November reached its lowest level since 2020.
- Another wave of adverse weather and a further drop in production is forecast for December.
- Malaysia’s crude stocks and exports are declining and palm oil prices are rising.
Declining palm oil production in Malaysia – what is the situation?
Malaysia is the second largest producer of palm oil in the world after Indonesia. However, this trend has been significantly disrupted in recent months. December is set to be the fourth consecutive month that Malaysia’s palm oil production will decline. Already in November, production was down 8.9 per cent from the previous month, giving a value of 1.62 million metric tonnes, the lowest crop since 2020. Palm oil exports were down 14.7% and palm oil stocks were down 2.6%.
The harvest may be even lower in December. Due to limited production, palm oil prices are increasing and are now exceeding those of sunflower and soybean oils, reaching values close to the records of about 2.5 years ago. Further price increases are possible in January, when Indonesia’s biofuel mandate is expected to increase, limiting palm oil exports to the global market. In addition, Malaysian stocks of the commodity are falling.
Malaysia’s weather situation causing problems
The cause of the difficult palm oil situation is the heavy rains that hit the plantations and caused severe flooding. The Malaysian Meteorological Department (MET) estimates that some areas in Malaysia are expected to experience further heavy rainfall and even flooding between 16 and 19 December, which could cause a further reduction in palm oil production. At the end of November, as much rain fell in some areas of Malaysia for four days as normally falls in these areas for six months of the year. Not only the palm oil harvest was affected, but also rice and other crops. The Malaysian Palm Oil Board (MPOB) estimates that crude palm oil production could fall by about 5-8%. This figure could rise to as much as 10 or 20% if the heavy rains continue.
