Rats, droughts and energy shortages are eating away at the world’s oil recovery

  • In Malaysia, where there is a shortage of energy, palm nuts are popular
  • Palm oil prices have remained higher than ever
  • Dry weather has been seen in the canola areas of Canada inhibiting the effect
  • High prices to encourage soybean planting in Brazil

Parak, Malaysia / Singapore, September 5 (Reuters) – In a palm oil field in the Parac region of Malaysia, watermelon seedlings sprout from colonies in many parts of the country as new land grows among palm seedlings.

Labor congestion caused by the cholera epidemic has forced managers of 2,000 hectares of land in the Salim River to find ways to protect their farms, despite the high prices of the world’s most edible oil.

“It’s easier to get your own teeth out now than to hire new employees,” said Ravi, a property manager who gave only his first name. I could not find the workers to take care of the farm.

Malaysia, the world’s second-largest palm oil producer, is facing a full-blown hurricane in five years.

International edible oil statistics

In many parts of the continent, from Canadian canola farmers to Ukrainian sunflower growers, the problems faced by various edible oil producers are microbial.

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Since mid-2020, an 80% drop in vegetable oils has pushed global food prices higher for many years

The FAO’s global edible oil index has increased by 91% since last June, and the economy is expected to re-emerge after the COVID-19 locks, increasing food consumption and consumption of edible oils.

Key World Food Oil Prices

But producers have struggled with a number of obstacles, including energy shortages, heat waves, and pests, which have led to low levels of edible oils – palm oil, soybeans, canola, and sunflower seeds – to their lowest levels in a decade. .

Alas, Malia

In Malaysia, which covers 33% of the world’s palm oil exports, the average production of palm seedlings fell from 7.85 hectares a year ago to 7.15 tons a year ago. According to the Palm Oil Board of Malaysia, it averages 1.41 tons per hectare, up from 1.56 tons per hectare in the same period last year.

Government Coronavirus Restrictions After collecting the supply of migrant workers from Indonesia and South Asia, many farms were harvesting two-thirds or less of the labor force.

More than half a dozen landowners interviewed by Reuters said the shortage of workers had forced them to extend their harvest from 14 days to 40 days, damaging the quality of the fruit and risking the loss of some parts. Fruit buds.

“It’s especially bad in Sarawak. “Some companies are losing 50% due to a shortage of producers.”

For the first time in 20 years, the Slim River closed its nursery to relocate workers.

Another plant manager, Chew, said they were forced to increase their wages by 10 percent to retain workers.

A small manpower to take care of farms also means a lot of pests, including rats, moths, and bag worms.

“Rats have created an environment in which rats can nest, feed and breed and cannot be caught by natural hunters,” says Andrew Cheng Mu Fah, director of botany in Sarawak.

On the Salim River, Ravi, on the other hand, says that about a quarter of them are suffering from a bed bug infestation in the yard.

It refers to the larvae that grow and feed on the trees.

Indonesian mills

Neighboring Indonesia, the world’s largest palm oil producer, does not have the same energy problems and is expected to increase production this year by planting more palm oil.

However, work on palm oil factories that turn palm oil into palm oil has affected the Covide-19 limit, said Dobra Mr, director of Indian Consumer Company and chief consumer of Godridge International.

He said the closure of palm oil mills over the length and breadth of Malaysia (and) Indonesia has become a major blow to the plant.

Palm oil is exported by default

Overall, the 2021 production from Indonesia and Malaysia, accounting for 90 percent of the world’s palm oil, is estimated at 66.2 million tons.

This is flat compared to 2020, but analysts say it could be a downward spiral if labor shortages and pests worsen.

North American dryer

Meanwhile, farmers in western Canada have planted canola in some dry soils for a century this spring, sending the canola’s future to the forefront in early May.

The July heat wave then burned crops across Canada, lowering USDA’s estimate of canola production by 4.2 million tons to 16 million tons, the lowest since 2012-13.

“We weren’t talking about a lot of rain and the crop was dry,” says Jack Frosse, who has been growing canola for about 50 years near Winkler, Manitoba.

Froy expects a quarter of a hectare of produce last year – “very disappointing.”

US soybeans were also hit by a drought, with USA USA cutting production forecast by 1.8 million tons a month ago.

That American soybean stock is down to eight years and American soybean production is down to ten.

“We are looking at an average crop because we have some groundwater,” said Jared, a farmer from North Dakota. But you don’t have to go far to the west to get into some very difficult crops.

In some good news, buyers are expected to hit a record 4% increase in the soybean crop area of ​​144/06 million tonnes, according to data from an agricultural trade consultant.

According to the USDA, Ukraine, the largest producer of sunflower seeds, will increase production by 18 percent from the 2020 drought and increase oil exports from 5.38 million to 6.35 million tons last year, according to the Ministry of Agriculture.

Anxious appearance

As analysts say, poverty continues to plummet and stock markets are shrinking.

The worsening COVID-19 epidemic in Malaysia will leave workers starving through the rest of the big palm production window.

Canadian farmers continue to face droughts, with Statistics Can’s official agency down to 24.3% and down 30.1%.

“We have a lot of issues with food supply around the world, Malaysia’s palm oil, Canadian canola and La Nina in South America,” he said.

He said that due to the drought, we are expecting low oil production in Canadian canola crops. The supply of vegetable oil is expected to remain stable until 2022.

The pressure on stocks is already feeding on consumer prices, and the trend is expected to continue, especially as filters raise prices to cover rising commodity prices.

According to Singapore-based Wilmar International (WLIL.SI), the increase in raw material costs in the first half of the year and the time lag between consumer prices have negatively affected the margins.

MEWI.SI, one of the largest refineries in the region, said the average selling prices for wholesale and consumer packaging increased by 54% and 24%, respectively, in the first half a year ago.

“Everyone around the supply chain is contributing some of the high costs,” said Oscar Tikra, a senior analyst at Rabbanbank’s Food and Agriculture Research. Expenditure pressure should continue next year.

As global consumers continue to face general economic instability as a result of the cholera epidemic, further increases in edible oil prices will result in a worsening of living conditions.

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Food inflation is rising all over the world

“Consumer prices are declining, even in low-income countries, such as low-income countries,” says Julian McGill, head of LMS International in Southeast Asia.

There is not much flexibility in the use of vegetable oils.

Additional report by Bernadette Christina Munte in Jakarta, Rod Nickel in Winnipeg, Anna Mano in São Paulo, Maximilian Heis in Buenos Aires, Pavel Polytechnic in Kiev and Chicago by Karl Plum; Edited by Gavin Magier and Jane Wardell

Our Standards – Thomson Reuters Principles.

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