Malaysia palm oil export recovery to halt: USDA FAS

Malaysian palm oil exports in 2021-22 have been revised up from earlier estimates despite labour shortages slowing output recovery, but in line with high import demand, the US Department of Agriculture's Foreign Agricultural Service (USDA FAS) has said.

Exports are then expected to inch down in 2022-23, on expectations of higher international oil supply next year.

Malaysia — the world's second-largest palm oil producer — is anticipated to export 16.5mn t in the 2021-22 marketing year (October 2021-September 2022), the USDA FAS projects, up from the 16.2mn t expected by the USDA earlier this month. This is despite the USDA FAS forecasting lower domestic crude palm oil (CPO) production this year than the USDA at 18.5mn t — 500,000t lower than the USDA estimates.

But this is in line with strong global demand, as an Indonesian CPO export ban and war-induced disruptions to Ukraine's sunflower oil exports have tightened global vegetable oil supply availability in the past weeks.

Exports are projected to edge down to 16.45mn t in 2022-23, despite expectations of an increase in domestic output by 1mn t on the year to 19.5mn t. Higher production estimates assume that labour shortage issues are resolved in the palm industry and normal weather conditions prevail.

Exports are expected to decline amid an anticipated recovery in global oil supply and amid stronger competition from soybean oil and Indonesian production. Exports to the EU in particular are forecast to fall from 2021-22.

Malaysia has launched an initiative to improve mechanisation and automation in the palm oil sector, in an effort to reduce the industry's dependence on foreign labour. The Marcop initiative provides funding for companies working on solutions to use technology to harvest fresh fruit bunches.

By Kristin Yavorska