Malaysia won't curb cooking oil exports as it eyes filling market gap

KUALA LUMPUR • Malaysia, the world's second-biggest palm oil producer, will not curtail cooking oil exports as it has enough supplies to meet local demand. It will instead focus on targeting subsidies to ensure they benefit the most needy consumers.

"So far, we have no worries because we definitely have no shortages at all," Plantation Industries and Commodities Minister Zuraida Kamaruddin said in an interview on Tuesday. "Most of the time, we export more than half of what we produce, and we still have an excess to export."

The nation aims to fill the gap in the edible oil market caused by the Ukraine war, as well as Indonesia's export curbs on palm oil, she said.

She forecasts Malaysia's palm oil production may rebound to between 23 million tonnes and 25 million tonnes this year, versus last year's 18.1 million tonnes, as coronavirus-driven labour shortages ease and foreign workers are allowed back in plantations, while smallholders boost productivity to capitalise on high prices.

The labour situation in local plantations will likely return to pre-pandemic levels by next month as issues with the inflow of foreign workers are being ironed out, Datuk Zuraida added, setting palm oil yields on track to climb in the second half of the year. "All the teething problems in terms of the worker application and processes" have been resolved, she said. "Everything is in place and now it's about workers coming in."

Around the world, governments are taking to food protectionism to secure local supplies and battle rising food costs, stoked in part by supply shocks caused by the war in Ukraine.

Top shipper Indonesia recently placed a temporary ban on palm oil exports, before replacing the move with a domestic sales quota after farmers protested. India has moved to curb wheat and sugar exports, and Serbia and Kazakhstan have imposed quotas on grain shipments.

High global commodity prices, which were initially expected to ease in the third quarter of the year, will likely remain elevated towards the year end or even next year before normalising, Ms Zuraida said. That is problematic for Malaysia, which is a net food importer and exposed to global shocks in the food supply chain.

Prime Minister Ismail Sabri Yaakob on Monday announced that the country will halt exports of chickens from next month, and investigate allegations of cartel pricing, as the nation seeks to secure its own supply. The move is set to hit Singapore, which sources a third of its chicken supply from Malaysia, as well as Thailand, Brunei, Japan and Hong Kong.

BLOOMBERG