Malaysia's Sime Darby Plantation eyes palm oil output recovery, high prices

Kuala Lumpur

MALAYSIA'S Sime Darby Plantation, the world's largest palm oil planter, forecast crude palm oil output in Malaysia and Indonesia would recover from last year's decline, and is optimistic prices will remain high this year.

Production of the edible oil in the top two producing countries fell last year due to extreme weather conditions and a coronavirus pandemicinduced labour shortage in Malaysia.

"This year we expect some recovery in (Malaysia's) production, I expect not less than what we achieved in 2019," group managing director Mohamad Helmy Othman Basha told a media briefing on Thurdsay.

While rising production may limit gains in Malaysia's benchmark crude palm oil prices, the firm forecast prices would average RM3,100 a tonne for the first half of the year and RM3,000 in the second half.

The contract traded at RM3,528 a tonne by Thursday afternoon.

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"This year will be a respectably good year for palm oil," said Sime Darby Oils managing director Mohd Haris Mohd Arshad.

The world's largest palm oil planter by land size reported a net profit of RM149 million (S$49 million) for the October to December period, versus a net loss of RM58 million in the year earlier quarter.

Revenue rose 8 per cent to RM3.64 billion.

The company discontinued operations in a joint venture and recorded an impairment loss of RM236 million.

Higher prices for crude palm oil and a stronger contribution from the company's downstream segment compensated for lower production last year, it said in a stock exchange filing.

"While the group continues to mitigate these challenges in 2021, one of our immediate priorities is to allay the concerns of our stakeholders over the Withhold Release Order issued recently by US customs," Mr Mohamad Helmy said.

In December, the United States banned palm imports from Sime Darby over accusations of forced labour used in production, prompting some global palm oil buyers to drop it from supply chains.

The company said it was working with independent bodies to tackle the accusations. REUTERS