KUALA LUMPUR (Nov 5): SD Guthrie Bhd (KL:SDG) still sees palm oil hitting RM5,000 per tonne next year as market overestimates output from Indonesia, the world’s largest palm oil producing country.
Production will begin to decline seasonally in the first quarter of 2027, and “the market will soon realise that the recovery rate out of Indonesia is actually going to be quite slow,” SD Guthrie president and group CEO Mohd Haris Mohd Arshad said during an earnings briefing on Thursday.
Indonesia’s biodiesel mandate and expectations that India will increase its reliance on palm oil imports to meet its vegetable oil demand will also support prices, he said.
The benchmark futures for the edible oil used in everything from infant formula to biodiesel have retreated from its August high of over RM5,000, The contract for January delivery was last trading at RM4,394 on Bursa Malaysia Derivatives.
Inventory in Malaysia, the world’s largest palm oil producer after Indonesia, have swelled to record-high levels as the spike in production outpaced the rise in exports.
Production of palm oil typically begins picking up in March-April and peaks in September-November. However, shipments have been affected by a surge in costs of diesel and freight.
“Vessels did not turn up on time,” Mohd Haris said. “Even if you do have a vessel come in, there are delays in some of the destination ports, so that has a knock-on effect.”
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