Will better labour supply and prices lift Malaysia’s palm oil outlook in 2024?

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Improved Labour Supply and Price Projections Point to a Brighter Outlook for Malaysia's Palm Oil Industry in 2024

The Malaysian palm oil industry is poised for an improved performance in 2024, driven by an anticipated enhancement in labour availability and more favourable price forecasts. Crude palm oil (CPO) prices are expected to fluctuate between RM3,900 and RM4,200 per tonne this year, a significant factor in this optimistic outlook. This projection is further bolstered by external market dynamics, including Indonesia's B35 biodiesel mandate, which is expected to constrain global palm oil supply available for export, thereby supporting higher prices.
Global Supply Constraints and Stable Stock Levels to Support Prices

Global palm oil supply is anticipated to remain tight throughout 2024. This situation is a consequence of adverse weather conditions experienced in 2023, which impacted yields, and a projected continuation of tight soybean production until at least April 2024. Concurrently, Malaysian palm oil stocks are expected to be managed below the 2.0 million tonne mark, a level conducive to price stabilization. In 2023, CPO prices had previously dipped below RM3,890.50 per tonne, a stark contrast to the record high of RM5,087.50 per tonne seen in 2022, primarily due to ample supply.
Increased Production and Exports Forecasted for 2024

Production of palm oil in Malaysia is projected to see a modest increase of 1.1 per cent, reaching 18.75 million tonnes in 2024, up from 18.55 million tonnes in 2023. This growth is attributed to an expected rise in the mature planted area, particularly in Peninsular Malaysia and Sarawak, and a gradual improvement in the labour situation. Furthermore, palm oil exports are forecasted to grow by 3.3 per cent to 15.60 million tonnes in 2024, an increase from the 15.10 million tonnes exported in 2023, signalling a recovery in demand.
Enhanced Export Value and Support for Smallholders

The export value of palm oil and its associated products is also expected to experience an upward trend, with a projected rise of 4.3 per cent to RM110 billion in 2024, compared to RM105 billion in the preceding year. To support the industry's long-term sustainability and smallholder livelihoods, a RM100 million incentive under the Palm Oil Replanting Programme 2.0 is being implemented. This initiative aims to assist approximately 1,500 independent smallholders (ISH) in replanting approximately 5,900 hectares of old oil palm trees, offering incentives of RM14,000 per hectare in Peninsular Malaysia and RM18,000 per hectare in Sabah and Sarawak.

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Will better labour supply and prices lift Malaysia’s palm oil outlook in 2024?

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