Malaysian Palm Oil Strengthens

Avatar for Matt Hopkins By Scott C. Lucas|8 September 2006

Crude palm oil production in Malaysia grew by 3.5% to 1.4 million metric tons (MMT) in July, according to the Malaysian Palm Oil Board (MPOB). While East Malaysia’s production was marginally higher than the previous month, output in peninsular Malaysia increased by 5.7%. Compared to July 2005, output during June 2006 was 6% higher, and is expected to show an uptrend before peaking around in September.

Prices strengthened by 11%, due largely to a surge in overseas demand in August and a rise in global soy complex prices. Despite an increase in production, overseas demand and higher disappearance have contributed to a 4% drop in carry-over stocks to 1.6 MMT at the end of August.

Government Assists Growth
In the recently launched "Third Industrial Master Plan (2006-2020)," the Malaysian government targeted total investments of US $7 billion in the development of the oleochemical and biodiesel industries of Malaysia in order to reach the gross export value of US $21.5 billion by 2020. During this investment period, the Director-General of the MPOB expects Malaysia’s palm oil production to grow 5% annually to meet the demand of producing biodiesel. In 2004-05, about 83% of the local output of 15.2 MMT of crude palm oil was exported.