<article><p class="lead">Labour shortages, bad weather and reduced fertilizer application will hit palm oil production this year, according to the Council of Palm Oil Producing Countries (CPOPC).</p><p>Indonesia's output is forecast to fall by 1mn-2mn t from last year's 44mn t, while the CPOPC has Malaysian production dropping by 4.3pc to 19mn t.</p><p>Malaysia's freeze on foreign worker recruitment and Covid-19 movement restrictions is the biggest issue heading into the peak season in this year's second half, which contributes to 60pc of annual production.</p><p>Malaysian Palm Oil Association chief executive Datuk Mohd Nageeb Abdul Wahab <a href="https://direct.argusmedia.com/newsandanalysis/article/2124891">previously predicted</a> the country could lose 10-25pc of its palm oil yield this year because of a depleted workforce.</p><p>Dry weather last year and the potential for overly wet conditions in the second half of this year, brought on by the La Nina weather trend, may also hit palm oil yields.</p><p>Demand is expected to recover as consumer countries such as China and India exit coronavirus lockdown restrictions, while <a href="https://direct.argusmedia.com/newsandanalysis/article/2106917">Malaysia</a> and <a href="https://direct.argusmedia.com/newsandanalysis/article/1975962">Indonesia</a> continue their higher domestic biodiesel mandates.</p><p class="bylines">By Amandeep Parmar</p></article>
