Agriculture & Food

Indonesia and Malaysia are the world’s first and second largest palm oil producers. However, the epidemic has significantly affected the palm oil production of these two countries and caused fluctuations in global palm oil prices. Many countries rely on palm oil. The industry has also had a ripple effect.

As the world's two major palm oil producers, Indonesia and Malaysia together account for 85% of the world's palm oil production and supply. Rabobank estimates that more than 70% of palm oil plantation labor in Malaysia comes from overseas. According to Reuters, as many as 84% of Indonesia’s palm oil industry are overseas workers.

In recent years, labor shortages have been plagued the palm oil industries in Indonesia and Malaysia. The lockdown measures under the epidemic have further exacerbated the shortage. Since the outbreak, the palm oil production of these two countries has declined significantly. The rebound.

According to the Malaysian Palm Oil Association (Malaysian Palm Oil Association), the shortage of labor has reduced potential production by 20% to 30%, and they expect this proportion to increase further this year, especially for smaller palm oil producers. .

The decline in production has also had a significant impact on prices. Data released by the Food and Agriculture Organization of the United Nations this month showed that global vegetable oil prices have risen for 12 consecutive months. Among them, the quotation of palm oil in May has reached the level since February 2011. The highest level.

Although both Indonesia and Malaysia have raised palm oil export taxes, India, the world's largest vegetable oil importer, still imported more than 700,000 tons of palm oil from Malaysia in April, which is almost double the same period last year.

However, the price of palm oil has more than doubled in the past year, so there are signs of rising and falling. A report issued by S&P Global Platts on June 14 pointed out that the local August palm oil futures trading price in Malaysia fell by about 10% on the same day. In this regard, market participants hope that the production capacity impact caused by the epidemic can be gradually restored. , On the other hand, it is because the trading price of soybean oil, which is a substitute, has seen a certain correction in recent days.

Palm oil is not only the main edible oil, but also an important industrial raw material. From chocolate to cosmetics, a variety of commercial products cannot be produced without it. Therefore, changes in palm oil prices may also bring certain prices to the downstream industrial chain. pressure.