Kuala Lumpur, Malaysia (CU)_ Malaysian officials urged palm oil millers to restart production and purchase oil palm fruits from farmers, following a recent drop in pricing for the edible oil that drove some enterprises to cease processing. According to the statement from an industry group, mills in Malaysia, the second-leading producer of palm oil in the world, had temporarily ceased operations due to unprofitable pricing.
In June, Malaysian crude palm oil futures saw their worst one-month decrease in almost 13 years, falling 22 percent and wiping out most of this year’s gains. In the first half of 2022, prices had reached an all-time high as a result of supply concerns. Malaysian millers usually purchase bulks of palm fruits depending on the average monthly palm oil price, which now costs approximately 6200 ringgit or $1,408.13 per bunch, but they sell the extracted oil depending on the daily market price.
Steven Yeow, northern president of the Malaysian Palm Oil Millers Association (POMA), stated, “No factory can afford to buy fresh fruit bunches at these prices”. According to Wee Jeck Seng, deputy minister for plantation industries and commodities, the government has received complaints about mills refusing to purchase oil palm fruits.
During an industry seminar, Wee said, “The fruits cannot be kept for more than two to three days, or they will rot. It will affect smallholders. The millers should be responsible, no matter if prices are high or low”. According to Wee, the state-run Malaysian Palm Oil Board, the industry’s governing body, will discuss the situation with the mills.
According to the media statement from the Malaysian Palm Oil Millers Association (POMA), mills that are already suffering staff shortages and high input costs will lose at least 150,000 ringgit ($34,114.17) for every 100 tonnes of crude palm oil produced at current pricing.