The recent severe flooding across Malaysia is expected to significantly impact the country’s palm oil production. Heavy rainfall and flooding disrupt harvesting activities and logistics, leading to reduced output. For instance, during previous flood events, crude palm oil (CPO) production declined by up to 15% in affected regions.
Given Malaysia’s role as a major palm oil producer, these disruptions can tighten global supply, potentially leading to higher palm oil prices. Analysts have observed that such supply constraints, combined with increased demand, often result in price increases.
Therefore, the current flooding is likely to exert upward pressure on palm oil prices in the near term. However, the extent of this impact will depend on the duration and severity of the flooding, as well as the industry’s ability to mitigate these challenges.