KUALA LUMPUR, Dec 19 — The Malaysian Palm Oil Board (MPOB) expects the country’s palm oil stocks to finish the year at 2.1 million tonnes or at least remain at the current level of 2.25 million tonnes on continued demand for the edible oil amid a lower-than-expected production.

The industry regulator has achieved its initial target made earlier this year of reducing Malaysia’s mounting palm oil stocks to 2.5 million tonnes this year from 3.2 million tonnes recorded in December 2018 — its highest level in 20 years.

The target was made by the former director-general (DG) Datuk Ahmad Kushairi Din, who said the MPOB had a daunting task ahead of it. 

Ahmad Kushairi then passed the baton to his successor Dr Ahmad Parveez Ghulam Kadir, who has pledged to further bring down the inventory to between 1.5 million and two million tonnes moving forward.

"We will be very happy if the stocks can reduce further to between 1.5 million tonnes to 2.0 million tonnes especially with the implementation of the B20 programme to kick in next year, and it is my wish to see the CPO price trading at RM3,000 per tonne,” Ahmad Parveez told Bernama.

Appointed on Aug 3, 2019, the new DG said the B20 programme (biodiesel with a 20 per cent palm blend) to be rolled out in stages next year is expected to increase local consumption to 25 per cent versus 18 per cent currently.

When the palm oil stocks stood at 3.2 million tonnes last year, crude palm oil (CPO) prices only managed to touch slightly above RM2,000 per tonne, he noted, adding that due to their low income, the planters needed to cut down expenses including for fertilisers, which indirectly resulted in reduced production.

However, today planters especially smallholders can heave a sigh of relief as CPO is trading at above RM2,800 per tonne and the good margins will enable them to fertilise their crops to boost production.

Ahmad Parveez also sees the government’s push towards Malaysian Sustainable Palm Oil (MSPO) certification as boosting production and opening up more markets.

As of Dec 9, about 60.6 per cent of the total oil palm planted nationwide has been MSPO-certified and the government expects by February it could reach 70 per cent.

"With our full-fledged MSPO-certified palm oil, after three to four years down the road, Malaysian palm oil productivity will start catching up. But whatever production we produce, I hope stocks are always manageable and the CPO price should not go below RM2,500 per tonne,” he said.

On the Love MY Palm Oil campaign, Ahmad Parveez said the board is seeing positive response from it and believes it is going to be continued for a few more years.

"For the industry, I hope we can have more downstream products and as the new DG, I would really want to bring together all the industry players (upstream and downstream) to work together to bring up the image, quality and productivity of palm oil.

"Currently there are 14 associations and I am planning that by early next year we could get these big groups to sit down together with the Minister of Primary Industries Teresa Kok to streamline our tasks.

"We want the whole supply chain to work together and follow best practices for the industry,” he added.

Sustainability has been the main theme for Malaysia’s palm oil industry throughout 2019, with the aim of reaching 100 per cent MSPO certification by year-end.

The target might take a little bit longer due to, among others, the land issue with some smallholders, but it is quite a jump from just below 20 per cent last year. — Bernama