PUTRAJAYA, Jan 12 ― The crude palm oil (CPO) price in 2023 is expected to range between RM4,000 and RM4,200 per tonne as compared to RM5,087.50 per tonne in the previous year, said Malaysian Palm Oil Board (MPOB) director-general Datuk Ahmad Parveez Ghulam Kadir.

In his presentation at the Review and Outlook Seminar 2023 today, he said Malaysia’s oil palm industry is set to continue its impressive performance this year amid strong demand and higher CPO production.

"The key drivers that will influence the prices of CPO are labour availability which is still an issue, lower sunflower seed production from Ukraine due to ongoing war with Russia and higher imports of palm oil by China as it loosens its Covid-19 rules.

"Other factors include Indonesia’s production of CPO, its biodiesel mandate to B35 and its tightened export policy,” he said.

Ahmad Parveez explained that effective January 1, 2023, Indonesia has tightened its export policy for palm oil to keep more domestic supply and less for exports to ensure ample palm oil for festive seasons as production is expected to be seasonally weaker in the first quarter of this year.

"Effective February 1, 2023, Indonesia will impose a higher biodiesel blending mandate, B35 from B30, and this is likely to increase domestic consumption of palm oil. These latest policy changes would further restrict the global palm oil supply.

"Hence, demand for Malaysian palm oil is expected to rise which will eventually assist in reducing higher domestic palm oil stocks,” Ahmad Parveez said.

He also noted that concerns over soybean oil supply risks due to dry weather patterns in Argentina and southern Brazil are also factors that will influence the prices of the Malaysia CPO.

"Even though there are several signals that dry weather in South America is improving, it may be too late in the season at this point to salvage some crops,” he said.

While factoring in pricing, Ahmad Parveez said the Malaysian palm oil industry experienced better performance mainly in terms of price in 2022 compared to 2021.

CPO average price in 2022 increased by 15.4 per cent at RM5,087.5 per tonne compared to RM4,407 per tonne in 2021, he said

Ahmad Parveez also said that the export of palm oil is expected to increase by 3.7 per cent to 16.30 million tonnes in 2023 from 15.72 million tonnes last year, attributed to the expected ongoing palm oil demand from importing countries.

He said 2022’s 15.72 million tonnes exports of palm oil increased marginally by one per cent compared to 15.57 million tonnes due to higher demand, especially from United Arab Emirates, Saudi Arabia, Japan, Bangladesh and Egypt.

He also foresees production to rise by three per cent to 19 million tonnes in 2023 from 18.45 million tonnes in 2022, following an expected increase in the mature planted area especially in Peninsular Malaysia and Sarawak, expected better weather conditions as well as labour situation which is foreseen to stabilise as the application for foreign workers has been approved in stages.

Malaysia’s 2022’s 18.45 million tonnes production is 1.9 per cent higher compared to 18.12 million tonnes in 2021, he said, and this was due to higher fresh fruit bunches (FFB) by 3.4 per cent arising from better FFB yield performance by 0.1 per cent to 15.49 tonnes per hectare.

Ahmad Parveez said the closing stock of palm oil, which amounted to 2.19 million tonnes last year, was higher by 35.9 per cent compared to 1.61 million tonnes recorded in December 2021.

"This was due to higher CPO production by 0.34 million tonnes or 1.9 per cent and higher palm oil opening stock by 0.35 million tonnes or 27.6 per cent,” he said.

He added that for the whole of Malaysia, the monthly net income of independent smallholders based on average farm ownership is RM2,634 with Sabah recording RM4,394, Sarawak RM3,189 and Peninsular Malaysia standing at RM2,150. ― Bernama