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Commodity Intelligence Report
March 10, 2015

MALAYSIA:  2014/15 Palm Oil Production Affected by Flooding


Extremely heavy rainfall blanketed important palm oil growing regions in Peninsular West Malaysia during December 2014, causing significant localized flooding and harvest disruptions. Rainfall totals exceeded 1,750 millimeters (70 inches) in some areas, which equates to roughly 300-600 percent of normal for the month. The most seriously affected states were Pahang, Terengganu, and Kelantan (see map below).

According to official government assessments, approximately 184,000 hectares of oil palm plantations were affected by lowland flooding. These floods prevented normal harvesting operations from occurring; disrupted transport of fresh fruit bunches (FFB) to crushing mills; and damaged roads, bridges, and palm oil processing equipment.

Total oil palm area in the 3 affected states was estimated by the Malaysian Palm Oil Board (MPOB) at approximately 1.02 million hectares in December 2013, of which roughly 842,000 hectares were mature and actively being harvested in 2014. Flooding, therefore, affected roughly 18 percent of total “planted” oil palm area in these states. It is unknown what the flood-affected acreage of immature versus mature acreage is at this time. Total palm oil production in calendar year 2014 (January-December) reached 3.66 million tons in Pahang, Terengganu, and Kelantan, accounting for 19 percent of national output. Of the three states, Pahang is by far the most important producer, ranking 4th in total area and production.

The government estimated that total palm oil production in Peninsular West Malaysia declined 230,000 tons in December compared to the same period last year. This was primarily attributed to significant rain and flood-related problems. Meanwhile, total national production of palm oil in the first quarter of the 2014/15 USDA marketing year (October 2014-September 2015) is down approximately 500,000 tons compared to last year owing to a generalized decline in harvested crop yield.

Officials in Malaysia have indicated that palm oil production in January is also likely to be lower than normal, owing to continuing after-effects of the recent heavy rainfall and floods. Repairing transportation infrastructure and palm oil processing equipment will take time. The oil palm trees themselves will recover gradually, though yields may be depressed for a period of months due to the rains interference with pollination and potentially lower oil extraction rates (OER) from waterlogged fruit. In general, the abnormally high rainfall pattern in December is expected to have a lingering influence on these states production outlook in 2015.

USDA estimates 2014/15 Malaysian palm oil production at a record 20.5 million tons, down 0.75 million from last month but up 0.3 million from last year. Harvested area is forecast at a record 4.7 million hectares, up approximately 0.175 million hectares from last year.

This report has been published by the Office of Global Analysis (OGA), International Production Estimates Division (IPAD). Current USDA area and production estimates for grains and other agricultural commodities are available on IPAD's Agricultural Production page or at PSD Online.

For more information contact Michael Shean | | (202) 720-7366
USDA-FAS, Office of Global Analysis

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