Malaysian palm oil futures extended gains to above MRY 6,400 per tonne in early June, trading not far from a record high of 7268 hit on March 9th as consumption is outpacing supply. The production outlook in Malaysia continues to deteriorate amid a labour crunch while Indonesia has so far re-entered the export market only slowly with export volumes allowed significantly low. Indonesia and Malaysia account for about 85% of the world’s supply of palm oil.
The Malaysian Palm Oil Council forecast Malaysia’s 2022 production at 18.6 million tonnes, below previous expectations and after Indonesia has canceled a long-awaited plan to send a batch of workers to operate in labor-starved Malaysia’s palm oil plantations. Palm oil prices are more than 35% higher this year as Russia’s invasion of Ukraine disrupted sunflower oil shipments and export restrictions in top producer Indonesia further squeezed global supplies.