Malaysia Palm Oil Production Outlook Slashed, Brazilian Soybean Crop Forecast Higher

Oleochem Analytics — Malaysia palm oil production for the marketing year September 2020 to August 2021 was lowered as weather and labour issues slowed output, according to a recent key oilseeds outlook report.

The USDA reduced its forecast for Malaysia’s palm oil production by 600,000 tons to 19 million tons from March’s projection of 19.60 million tons, according to its April 2021 oilseeds report.

Malaysia’s yields were limited because of an ongoing labour shortage exacerbated by Covid-19 and adverse weather conditions caused by La Nina. Additionally, this lower output was the main cause for the 350,00 ton global reduction in projected 2020/2021 palm kernel production. 

These same types of disruptions did not affect Indonesia’s forecast output, which was left unchanged at 43.50 million tons.

Indonesia and Malaysia are the two largest producers of palm oil globally. Together they account for 85% of global production.

The outlook for Brazilian soybeans was higher as steady progress has been made in the current harvest/crush.

The Brazilian soybean crop yield for 2020/21 was raised to 136 million tons, a 2 million ton increase from the previous month’s 134 million ton projection. 

The Argentinian soybean crop remained unchanged at 47.50 million tons for this harvest season.

In total, the USDA projects that global 2020/21 oilseed production will reach 598 million tons, 2 million more than it had forecasted a month ago.  Larger soybean and rapeseed crops more than offset smaller sunflower seed and palm kernel crops.

Oilseed export forecasts were raised by over 1 million tons to 170.912 million tons, mostly on higher Brazil and U.S. soybean exports, which combined make up more than 86% of the global total.

Oilseed crush is forecast slightly lower, by over 1 million tons to 322.471 million tons. Reductions in soybean, sunflower seed, and palm kernel crush offset a rising rapeseed crush.

The USDA forecasts that global oilseed stocks will increase by almost 4 million tons to 86.871 million tons, as it expects higher Brazil and China stock levels to offset reduced Argentina soybean stocks.

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