The global palm oil market is expected to tighten this year as floods and older trees constrain production in the world’s second-biggest supplier, a major Malaysian growers group said.
Indonesia and Malaysia might only see a marginal increase in output this year of less than 3 percent, respectively, Malaysian Palm Oil Association CEO Joseph Tek said in a statement.
Heavy rainfall and floods in parts of Malaysia would constrict production in the short term because of disruptions to harvesting and logistics, and result in poorer quality fruit, he added.
Photo: Reuters
The number of trees older than 25 years has also expanded, meaning a portion of plantations would be less productive.
Replanting has been slow due to high costs, and the top-producing state in Malaysia, Sabah, now has the country’s highest area of trees above that age, Tek said.
A tightening palm oil market raises concerns over the potential for higher food costs, just as central banks boost interest rates to curb inflation.
The weather is also posing a problem.
“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 fertilizers are ongoing,” Tek said.
Other commodities:
‧Gold for April delivery increased US$32.60 to US$1,867.20 an ounce, rising 0.68 percent from a week earlier.
‧Silver for May delivery gained US$0.34 to US$20.51 an ounce, but dropped 3.44 percent weekly, while May copper fell US$0.01 to US$4.03 a pound, posting a weekly decline of 0.98 percent.
Additional reporting by AP
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