KUALA LUMPUR: Malaysia's palm oil industry chalked up a mixed performance in the first eight months of the year, marked by higher prices and output plus a notable yield improvement.

However, it faced challenges such as a decreased planted area and a slight decline in the oil extraction rate.

The industry chalked up higher exports and revenue during the period due to an increase in global palm oil prices, the Malaysian Palm Oil Board (MPOB) said today.

Between January and August, crude palm oil (CPO) prices rose by 3.1 per cent, or RM121.50, to a high of RM4,005.50 per tonne from RM3,884 in the same period last year, MPOB director-general Datuk Dr Ahmad Parveez Ghulam Kadir told Bernama.

While the industry faced challenges related to the planted area and oil extraction rate (OER), he said it experienced notable improvements in the yields of fresh fruit bunches (FFB), CPO production, and a strong performance in export volume and revenue.

The world's most used edible oil globally, the palm oil industry contributed an average of 5-7 per cent to Malaysia's gross domestic product over the last five years and provides direct and indirect employment to over three million people.

Ahmad Parveez noted that as of August, the area planted with oil palm declined by 51,541 hectares, or 0.9 per cent, bringing the total planted area to 5.60 million hectares, down from 5.66 million hectares recorded in August 2023. "Notably, the area of mature oil palm represented 90.8 per cent of the total planted area, amounting to 5.09 million hectares, compared to 5.15 million hectares (91.0 per cent) in the same period last year," he said.

 Palm oil production

In terms of production, Ahmad Parveez said the yield of fresh fruit bunches (FFB) for the estates sector improved significantly from January to August 2024, up 12.0 per cent to 10.82 tonnes per hectare, up from 9.66 tonnes per hectare in the same period in 2023.

"This rise in yield contributed to an overall increase in CPO production, which reached 12.61 million tonnes - a 10.2 per cent increase compared to 11.45 million tonnes from January to August 2023.

"This growth was driven by an 11.1 per cent rise in FFB processed, totalling 64.44 million tonnes, up from 57.99 million tonnes the previous year," he noted.

However, he highlighted that the OER experienced a slight decline of 0.9 per cent, falling to 19.57 per cent from 19.74 per cent in 2023.

 Palm oil exports

Malaysia's palm oil exports during the review period rose 1.07 million tonnes (11.1 per cent) to 10.74 million tonnes from 9.67 million tonnes in the same period last year.

Export revenue rose 11.7 per cent to RM45.28 billion compared to January-August 2023 due to higher global prices for palm oil products.

He said traditional buyer India maintained its position as the largest market for Malaysian palm oil exports during this period, accounting for 2.02 million tonnes, or 18.8 per cent, of total exports.

Other key markets included China with 896,705 tonnes (8.3 per cent), the European Union with 857,688 tonnes (8.0 per cent), Kenya with 683,893 tonnes (6.4 per cent), Turkiye with 560,549 tonnes (5.2 per cent), Japan with 407,539 tonnes (3.8 per cent), and the Philippines with 407,320 tonnes (3.8 per cent).

"Collectively, these seven markets represented 5.83 million tonnes, or 54.3 per cent, of total Malaysian palm oil exports from January to August 2024," he added.

 CPO price movements

For the first eight months of the year, the price of CPO rose 3.1 per cent, or RM121.50, reaching RM4,005.50 per tonne from RM3,884 per tonne from the same period in 2023.

Last year, average CPO prices were at RM3,809.50 per tonne, a substantial 25.1 per cent decrease from 2022.

Ahmad Parveez said the higher prices were due to a combination of factors, including stronger Brent crude oil prices in the global market which made palm oil a more attractive option for biodiesel feedstock, as well as lower palm oil stocks, which remained below two million tonnes. Additionally, he said a weaker ringgit against the US dollar made palm oil more affordable for international buyers.

He said the current price uptrend further underscores the palm oil sector's resilience in a dynamic global market.