Malaysia's palm production outlook cut on lower yields in 2023: industry executives

Malaysia's crude palm oil production is expected to be around 17.9 million mt-18.5 million mt in 2023, representatives of industry trade bodies said at Malaysian Palm Oil Board's biennial event PIPOC 2023 on Nov. 7.

MPOB expects production to reach 18.5 million mt this year, slightly higher from the 18.45 million mt in 2022, but lower than its earlier expectations of 19 million mt.

The price of palm oil may rise to MR 4,000/mt ($856.75) by the end of the year, supported by strong demand and limited supplies, the state-run industry body said Nov. 7.

Meanwhile, the Palm Oil Refiners Association of Malaysia (PORAM) said annual output could fall to 17.9 million mt, weighed down by lower yields from aging palm oil trees.

Malaysia is the world's second-largest palm oil producer after Indonesia.

Floods in parts of the country, slow replanting of old trees and departure of foreign workers during the festive season will weigh on production, said Ahmad Parveez Ghulam Kadir, director general of MPOB.

Replanting of old and lower yielding oil palm trees has also been lower than desired, Ghulam Kadir said.

"The average replanting rate across Malaysia has been around 2% in the past few years, only half the MPOB recommended rate of 4%. This is because in the last two years prices have been very good and growers have been reluctant to cut old trees and lose that production," the MPOB head said.

Last year, 2.09 million hectares of Malaysia's 5.9 million hectares of oil palm plantations was covered by older trees which need replanting, PORAM CEO A. Fadzli Abdul Aziz said at the conference.