Malaysia’s palm oil production is set for the steepest monthly decline in more than a year after floods across its major growing state, trimming inventories and likely underpinning higher prices.
Output tumbled 16% in February to 1.33 million tonnes, according to the median of 12 estimates in a Bloomberg poll of plantation executives, traders and analysts. That would be the biggest drop since January 2025, and extend production declines for a fourth straight month.
Heavy rain and flooding hammered plantations in Malaysia’s Sabah last month, a region that accounts for about a fifth of the country’s output. Even before the wild weather, the nation’s production was expected to decline in February due to seasonal lows and shorter working days due to holidays.
Inventories slid 6% from January to 2.65 million tonnes, according to the survey, a second monthly drop that puts them at the lowest in four months. However, the decline was capped by weaker Malaysian exports - forecast in the poll to have dived 20% on-month to 1.19 million tonnes.
The Malaysian Palm Oil Board is scheduled to publish its monthly figures on March 10.
Malaysia’s stockpiles swelled to a seven-year high in December and a further decrease could help underpin higher palm oil prices, which have been pressured by deteriorating export demand and the strong ringgit.
Looking ahead, traders are cautious on the demand outlook for vegetable oil as the Iran war raises concerns about trade flows, according to Anilkumar Bagani, head of research at Mumbai-based Sunvin Group. - Bloomberg
