KUALA LUMPUR: Palm oil supplies are likely to remain tight for the next two to three months as floods have affected production in the world’s top two producers, Indonesia and Malaysia, a leading palm oil producer told Reuters on Tuesday.
Lower production in key producing countries could support benchmark futures, and sustain the commodity’s premium over competing oils. “Supply in the next two to three months will be tight,” said Lee Oi Hian, Executive Chairman of Kuala Lumpur Kepong Berhad, which has plantations in Malaysia and Indonesia.
Palm oil yields in the first two months of the year have been affected by the floods, especially in Sabah, Malaysia and Indonesia, Lee said on the sidelines of the palm and lauric oils conference.
The industry could feel the impact of the floods even in the longer term as usually higher rainfall leads to poor pollination and creates other problems, he said. He maintained, however, that production would recover in the second half of the year. Palm oil production growth has slowed in Malaysia since 2019 and now output growth has been slowing in Indonesia as well because of ageing trees, Lee said in a presentation earlier on Tuesday.
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