Friday 02 Jun 2023
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KUALA LUMPUR (March 11): Malaysia's benchmark crude palm oil prices are expected to stay supported at RM4,000 (US$885.15) a tonne in the near term due to tight availability of surplus, the Malaysian Palm Oil Association (MPOA) said on Saturday (March 11).

Production in the world's second largest producer in 2023 is forecast higher at 19 million tonnes, from 18.5 million tonnes last year, MPOA said.

In larger producer Indonesia, production is expected to rise to 48.3 million tonnes in 2023, from 46.8 million tonnes last year.

"The last three years of La Nina have caused significant damage to oil palm root systems, which may take time to recover, even as the application of rooting fertilisers are ongoing," Joseph Tek, MPOA chief executive, said in a statement.

"The rising number of over-aged and very tall oil palm trees in Malaysia will also continue to constrain supply as replanting has been slow due to high costs," he said.

In Malaysia's largest palm oil producing state Sabah, 36% or more than half a million hectares of oil palm trees are above 19 years old, Tek said.

Old oil palms trees are tall and unproductive and are typically replanted with new seedlings that are higher-yielding, shorter and resistant to drought and disease.

Sabah accounts for nearly a quarter of Malaysia's production.

While a pandemic-induced labour shortage in Malaysia has eased and is expected to reach normalcy by mid-year, MPOA warned that the new batch of migrant workers may not be trained in time for the peak season, typically lasting from August to October.

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