Malaysia’s SD Guthrie sees El Niño impacting 2027-28 palm oil output
20/08/2026 (Ofimagazine) - Leading palm oil company SD Guthrie, formerly known as Sime Darby Plantation (SD Plantation), said it expected production to be impacted in 2027 and 2028 with El Niño set to bring drier and hotter weather, Reuters reported.
Speaking at a press conference on 11 August, the company’s CEO Mohd Haris Mohd Arshad said production for the rest of 2026 was expected to remain largely unaffected by El Niño, as its effects were not felt immediately but followed a 12-to-16-month lag.
SD Guthrie posted a net profit of MYR987M (US$241.3M) for the April-June period, almost double the MYR505M (US$124.3M) the previous year.
However, its revenue declined from MYR5.17bn (US$1.27bn) to MYR4.94bn (US$1.21bn).
In a statement on its second-quarter results, the company – based in Kuala Lumpur with operations in Indonesia, Papua New Guinea and Solomon Islands – said its performance was underpinned by gains from its industrial development and downstream segment.
Those gains helped offset the decline from its upstream business, which was partly cushioned by higher average crude palm oil (CPO) and palm kernel prices.
In the near-to-medium term, tightening global supplies and resilient demand were expected to keep CPO prices elevated, the company said.
“Supply-side pressures are likely to intensify with the anticipated emergence of El Niño conditions towards the end of the year, while demand will be underpinned by the implementation of Indonesia’s B50 biodiesel mandate and firm crude oil prices amid renewed geopolitical tensions,” it said.
To date, Malaysia’s benchmark CPO prices had climbed 18% to MYR4,723 (US$1,163)/tonne this year.
CPO prices were expected to range between MYR4,600-MYR5,000 (US$1,133-1,231)/tonne over the remainder of this year, before potentially rising to MYR5,200 (US$1,280)/tonne in the first quarter of next year, Sandeep Bhan, SD Guthrie’s global trading CEO, said at the press briefing.
Meanwhile, leading Asian agribusiness Wilmar International was expected to see shortfalls in production in 2027/2028 compared to the second half of the current year, with risks of a prolonged dry spell in Indonesia impacting plantations, The Edge Malaysia wrote citing CIMB Securities.
A drop in Indonesia’s palm oil export supply could potentially benefit Malaysian planters, according to CIMB Securities.
The outlook came as Wilmar International delivered its 2026 first half results on 12 August, when it said declining rainfall in Kalimantan, Indonesia, since July could strongly affect the production yield of CPO, the 14 August report said.
“With 70% to 80% of Wilmar’s Indonesian estates located in Kalimantan, prolonged dry conditions could affect yields with a lag, leaving production more exposed in 2027-2028 than in the second half of 2026,” CIMB Securities said in a note on 14 August, following an analyst briefing.
Wilmar’s fresh fruit bunch (FFB) yield was estimated to have dropped 6% year-on-year to 1.92M tonnes in the first half of 2026, due to lower crop production in Indonesia.
Despite the decline, Wilmar’s plantation weakness was mostly offset by the group’s high sales volumes and robust earnings growth in the period, with pre-tax profit rising 13% year-on-year to US$1.06bn, based on a revenue of US$38.6bn, the report said.
Against this backdrop, CIMB retained its CPO price forecasts of MYR4,450 (US$1,096)/tonne for 2026 and MYR4,550 (US$1,120)/tonne for 2027.