Ukraine war benefits Malaysian palm oil, but foreign worker shortage curbs production output

Amid labour shortage and high demand, Malaysia will hire 180,000 workers to harvest palm oil as alternatives to cooking oils no longer available from Ukraine

One analyst believes the Ukraine-Russia war – now in its second month – could last 15 years which could mean an extended boost for Malaysian palm oil exports

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Harvested oil palm fruits are loaded into a trailer at a plantation in Kapar, Selangor, Malaysia. Exports of palm oil have increased as supplies of other cooking oils have been affected by Russia’s invasion of Ukraine. Photo: Bloomberg

Amy Chewin Kuala Lumpur

Published: 5:36pm, 14 Apr 2022Updated: 8:33am, 15 Apr 2022

Malaysian palm oil exports could see a prolonged lift as the Russia-Ukraine war drags on indefinitely, observers say, as the likes of India and the European Union secure alternatives to sunflower and rapeseed oil no longer available from Ukraine.

A prominent geopolitical risk forecaster suggested the conflict – now in its second month – could drag on for 15 years, likening it to the civil strife in Syria.

Data released this week by the Malaysian Palm Oil Board showed exports of the commodity from the Southeast Asian country to the European Union surged 48.3 per cent in March compared with February.

“One notable bright spot was the strong exports to the EU, with palm oil demand rising to fill in the shortage of sunflower and rapeseed oils from Russia and Ukraine,” said Public Investment Bank (PIVB) in a report released on Wednesday.

A worker uses a motorised harvesting sickle to cut a palm oil fruit bunch from a tree at a plantation in Kapar, Selangor, Malaysia. Photo: Bloomberg

In India, the Solvent Extractors’ Association of India (SEA) said Indian palm oil exports jumped 18.7 per cent. Malaysian palm oil exports to India rose 20.8 per cent in March 2022. Experts said the shift towards palm oil by India, the world’s largest importer of edible oils, was very likely to help Malaysian exports too.

Chong Hoe Leong, a commodities analyst with PIVB, said EU members the Netherlands, Spain and Italy were expected to buy more palm oil as they were “normally the big palm oil countries”.

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