The Malaysian oil palm industry assisted by prudent government policies,recorded a significant recovery in 2002 despite a weak global economy. Themarginal increase in the production of palm oil and exports amidst a tightsupply in the global oil and fats industry, had pushed up the price ofcrude palm oil (CPO) sharply by 52% over the previous year to RM1,363.50per tonne. The year ended with a lower palm oil stock level of 1.14million tonnes.

The production of CPO in 2002 increased marginally by 0.89% to 11.9million tonnes from 11.80 million tonnes recorded in the previous year.The increase was contributed by the expansion in matured area and a higheroil extraction rate (OER). The campaign on productivity in the oil palmindustry by the government, had to a certain extent contributed to theincrease in OER.

The total exports of oil palm products, constituting of palm oil, palmkernel oil, palm kernel cake, oleochemicals and finished productsincreased marginally by about 60,000 tonnes or 0.4% to 14.68 milliontonnes compared to 14.62 million tonnes in 2001. However, owing to higherprices of oil palm products, the total export value of oil palm productsincreased by a hefty 38% to RM19.62 billion in 2002 as against RM14.22billion in 2001. The exports of palm oil increased by 260,400 tonnes or2.5% to 10.88 million tonnes. The major markets were China P.R. (1.8million tonnes), India (1.7 million tonnes), EU (1.5 million tonnes),Pakistan (1.1 million tonnes), Eygpt (0.5 million tonnes) and Japan (0.4million tonnes). Together, these six countries accounted for 65% of totalexports of palm oil by Malaysia.

The competitive price of palm oil, liberalization of export duties, theencouragement of counter-trades and the provision of POCPA facilities bythe government had contributed to the higher exports.

The closing stock of palm oil for the year was 1.14 million tonnes asagainst 1.21 million tonnes recorded in 2001 or a decline of 6% arisingfrom increased exports and low carry-over stock in the beginning of theyear.

The prices of oil palm products recovered sharply with the average CPOprice registering a jump of 52.4% to RM1,363.50 from RM894.50 in theprevious year. The highest and lowest monthly average crude palm oil pricerecorded was RM1,645.50 and RM1,123.50 in December and February 2002respectively. Similarly, the export prices of RBD Palm Olein also improvedby 49.5% to RM1,447.50 and RBD Palm Oil by 44.6% to RM1,354.00. Forsmallholders, it had been a good year as the average price of FFBincreased by 65.3% to RM248.00.The performance of the Malaysian oil palm industry is expected to besustained and improve further in the year 2003. The production of CPO isexpected to be around 12.2 million tonnes and export demand is forecast tofurther improve arising from higher world demand and a further depletionof world oils and fats stocks by 11.8% to a low of 13.1 million tonnes.Consequently, the prices of oil palm products is expected to strengthenfurther in 2003.

Datuk Dr. Yusof BasironDirector General MPOB

13 January 2003