MARKET DEVELOPMENT
Malaysia sees higher palm oil output in 2022 as workers return
Malaysia sees higher palm oil output in 2022 as workers return
30.10.2021 (www.theedgemarkets.com) - KUALA LUMPUR (Oct 29): Malaysia will likely relax cross-border restrictions on foreign workers in the second half of 2022, a move that will ease the severe labour crunch in palm oil plantations that’s contributed to a global edible oil rally.
Crude palm oil output is expected to increase with improved production of fresh fruit bunches and a better oil extraction rate, the finance ministry said in an Economic Report 2021/2022 released alongside the country’s Budget 2022 on Friday.
Palm, the most consumed edible oil, has been a leading driver of this year’s stunning rally in global vegetable oil markets. Malaysia’s production is set to drop to its weakest in five years, as planters grapple with the worst-ever labour shortage in the second-biggest grower. A industry group representing 40% of palm plantations by area estimates that the low yields will last through March.
The continuation of the nation’s B20 biodiesel programme for the transport sector, coupled with higher demand from India and China, will further support palm oil production, the finance ministry said. Malaysian palm oil futures have rallied about 70% in the past year, after hitting a record high this month.
Other highlights from the report:
Rubber
Rubber output is forecast to expand as strong prices encourage tapping activity.
World demand for natural rubber is expected to climb and stimulate domestic rubber production.
Development of East Coast Latex Corridor and adoption of digitalisation in the industry will also boost the sector.
Livestock and others
Livestock and other agriculture sub-sectors are expected to see an uptick due to higher demand for food.
Government policies that emphasize sustainability of agro-food and agri-commodities industries will help boost food security
Malaysia’s agriculture sector is forecast to expand 3.9% in 2022, underpinned by commodities.
Taxes
Collection from windfall profit levy jumped to RM 900 million (US$217 million) this year, from RM 200 million a year ago, due to higher crude palm oil prices.
Total export duty collection from crude palm oil may drop to RM 650 million in 2022, from an estimated RM 700 million this year.
Collection from crude petroleum export duty seen at RM 850 million ringgit, versus RM 626 million this year.