Malaysia’s SD Guthrie sees El Niño impacting 2027-28 palm oil output
Production for the rest of 2026 is expected to remain largely unaffected
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[KUALA LUMPUR] Malaysia’s SD Guthrie, one of the world’s largest palm oil producers, said on Tuesday (Aug 11) that it expects production to be impacted in 2027 and 2028 with El Niño set to bring drier and hotter weather.
Production for the rest of 2026 is expected to remain largely unaffected by El Niño, as its effects are not felt immediately but instead follow a 12-to-16-month lag, chief executive officer Mohd Haris Mohd Arshad said at a press conference.
SD Guthrie posted a net profit of RM987 million (US$241.3 million) for the April-June period, almost double the RM505 million from a year earlier.
However, its revenue declined to RM4.94 billion from RM5.17 billion.
The company – based in Kuala Lumpur with operations in Indonesia, Papua New Guinea and Solomon Islands – saw its shares fall 0.9 per cent to RM6.77 as of 0645 GMT.
In a statement on its second-quarter results, SD Guthrie said its performance was underpinned by gains from its industrial development and downstream segment. That helped offset the decline from its upstream business, which was partly cushioned by higher average crude palm oil (CPO) and palm kernel prices.
In the near-to-medium term, tightening global supplies and resilient demand are expected to keep CPO prices elevated, the company said.
“Supply-side pressures are likely to intensify with the anticipated emergence of El Niño conditions towards the end of the year, while demand will be underpinned by the implementation of Indonesia’s B50 biodiesel mandate and firm crude oil prices amid renewed geopolitical tensions,” it said.
Malaysia’s benchmark CPO prices have climbed 18 per cent to RM4,723 a metric ton so far this year.
CPO prices are expected to range between RM4,600 and RM5,000 over the remainder of this year, before potentially rising to RM5,200 in the first quarter of next year, Sandeep Bhan, SD Guthrie’s global trading CEO, said at the press briefing. REUTERS
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