Malaysia sees 2027 palm output declining, announces support measures

[KUALA LUMPUR] Malaysia expects crude palm oil production to decline marginally in 2027, with prices likely to remain high on tighter supplies and sustained global demand, particularly from biodiesel programmes, a government economic outlook report showed on Friday.

Benchmark crude palm oil contract was trading at RM4,666 by the midday break on Friday (Oct 9), up 17 per cent year to date, with an average closing price of RM4,525.

Prices are forecast to average between RM4,450 and RM4,600 (US$1,088 and US$1,125) per metric ton next year, per the report

El Nino, which typically brings hotter and drier conditions to top palm oil producers Indonesia and Malaysia, is expected to curb output, while rising biodiesel demand in Indonesia could further tighten supplies

“The oil palm subsector is projected to record marginal declines in fresh fruit bunches yields and crude palm oil production in line with its biological yield cycle,” the report said

However, better fresh fruit bunches quality is expected to support a marginal improvement in oil extraction rate, it said.

In parliament, Prime Minister Anwar Ibrahim announced RM100 million in hybrid financing, which will help 4,500 smallholders replant their oil palm.

Additionally, RM200 million in soft loans will also be offered to cover replanting costs for holdings of up to 40 hectares.

Repayment will be deferred for four years, and smallholders will pay 2 per cent interest, with the government covering the rest, he added.

SEE ALSO

Malaysia unveils tax relief measures, wider income reforms in US$112.5b 2027 spending boost

The government also announced RM30 million to control crop diseases and pests in oil palm, cocoa and pepper. REUTERS