Palm Oil Export Outlook Slowed by Ageing Trees and Slowdown

• Malaysian farmer Suratmen Mosman’s plantation, located 300 km south of Kuala Lumpur, is facing a dilemma as ageing trees are bearing less fruit.

• Mosman is holding off replacing these trees to avoid income loss and the three to five years it takes for new trees to start yielding a crop.

• Government subsidies to encourage replanting are not as high as they once were, and he needs to support his family.

• Palm oil, used mostly as cooking oil, cakes, cosmetics, and cleaning products, makes up more than half of the world’s vegetable oil supply.

• The market is at a tipping point as combined exports from the two producers are set to slow sharply due to stagnating production and efforts by Indonesia to divert more palm oil into biodiesel production.

• Smallholders, who make up 40% of the plantations across Malaysia and Indonesia, play a vital role in the supply chain.

• Exports from the world’s top two producing countries are set to fall further on replanting delays, rising local demand, and higher biodiesel blending mandates