PALM OIL PRODUCTION LIKELY TO RECOVER, BUT GROWTH DYNAMICS LOST

KUALA LUMPUR, March 8 (Bernama) -- Palm oil production is likely to recover in the second half of this year, partly due to the improvement of manpower in producing countries.

However, ISTA Mielke GmbH - Oil World executive director Thomas Mielke said the oil palm plantation sector has lost its growth dynamics and is not likely to double its growth -- which is something that has been happening every decade -- due to the potential threat of El Nino, expected to occur in July/ December 2023 and January/ December 2024. 

“We have seen poor production levels worldwide in 2020, 2021 and 2022, although there was some recovery. 

bootstrap slideshow

“At this rate, in my opinion, palm oil production will slow down considerably in the next 10 years to only 1.9 million tonnes average growth per year or even less, compared to the average growth of 2.9 million tonnes in the 10 years up to 2020," he said.

Speaking at the Annual Palm & Lauric Oils Price Outlook Conference & Exhibition (POC2023) today, Mielke said if the demand for biofuel and food continues to increase, there is a risk that the global palm oil supply would run into a deficit. 

The threat posed by El Nino this year would also affect sentiments, he said. 

“The development in Malaysia and Indonesia is also threatening yields potential due to the lack of replanting, management constraints, soaring input costs, strict sustainability criteria that discourage investments, and a slowing down in new plantings. 

"We think worldwide (in the palm oil mature area), there will be only 0.3 million hectares in annual growth, compared with the 800,000-one million hectares growth per annum in the recent years," said Mielke. 

Nevertheless, he projected the global palm oil production to increase by 2.1 million tonnes to 80.9 million this year, with Malaysia’s own production rising by 0.6 per cent to 19.0 million and Indonesia’s production increasing by 1.2 million tonnes to 46.7 million tonnes. 

On the same note, Mielke said although palm oil exports have been strong, it is likely to slow down in April/ September partly due to a supply-demand-driven development, which could also be exacerbated if the Indonesian government imposes restrictions on exports due to fears of low stocks and prices. 

-- BERNAMA