By Chan Quan Min
Some of the worst floods in decades over much of Peninsular Malaysia could have economic repercussions long after floodwaters subside, especially for the country’s main cash crop, said a plantations analyst today.
Over 220,000 flood victims have been counted in the hardest hit states of Kelantan, Terengganu, Pahang and parts of Kedah, Perak, Negeri Sembilan and Johor. Floodwaters have forced people out of their homes since mid-month in some areas.
According to a report by CIMB Research today, the floods are negative for Malaysian planters with estates in the worst hit states.
“The floods are expected to reduce palm oil output … as harvesting, milling and transportation activities at the palm oil estates and related processing facilities located in affected areas will be disrupted.
“The four worst-hit states (Terengganu, Pahang, Kelantan and Perak) accounted for 30% of Malaysia’s palm oil supply in 2013,” said CIMB Research.
“Planters with the highest estates exposure to the states impacted by the floods are Felda Global Ventures (FGV), followed by Sime Darby, IOI Corp and KLK. However, we feel it is too early to assess the exact impact of the flooding on palm oil output as we are unable to predict the severity and length of the on-going monsoon.”
Traders hoping to see some respite from low crude palm oil prices from the drop in output should not be too enthusiastic as the report said that any rise in prices would not be sufficient to cover the loss in production.
A glut in edible oil production, higher import duties in India and low crude oil prices will continue to suppress crude oil prices, analysts warn.
You must be logged in to post a comment.