Malaysian palm giant FGV holdings officially reported a deep first-quarter loss on lower output and a demand slump due to the pandemic outbreak but were upbeat that the return of top buyers, India and China, will boost its performance in the second half of the year.
It’s not novel news that the first-quarter crude palm oil output from the world’s largest palm producer fell of 33% year-on-year, because of the reduced fertilizer application and dry weather conditions. However, FGV expects yields to normalize in the next month.
A worker collects palm oil fruit inside a palm oil factory in Sepang, outside Kuala Lumpur. Image credit Reuters, Samsul Said
The statistics expect the company to produce 4.5 million tonnes of crude palm oil this year, according to the FGV holdings declarations, up from 4.4 million tonnes in 2019.
“With Indian trade restored, and the easing of Malaysia’s movement control order, sales are expected to pick up in tandem with production, as the impacts of drought and fertilizer adjustments in 2019 wane,” Chief Executive Officer Haris Fadzilah Hassan announced yesterday.
FGV also affirmed that, while sales volume fell during the quarter ended on March 31, the company has been able to manage the market by securing sales to India for delivery in June and July. It has also signed an agreement with an India-based company to strengthen its participation in the food products market there. Yet, no further details were given.
Haris Fadzilah also mentioned the fact that there are signs that other countries, including China, plan to replenish palm oil supplies as they are relaxing their coronavirus lockdown measures day by day.
A worker unloads palm oil fruits from a lorry inside a palm oil factory in Salak Tinggi, outside Kuala Lumpur. Image credit Yahoo News
FGV expects crude palm oil prices to trade between 2,200 to 2,400 ringgit per tonne this year. Malaysia benchmark crude palm oil was seen at 2,262 ringgits ($519.50) per tonne last Thursday.
Haris Fadzilah declared that FGV is also exploring potential acquisitions in the food processing sector, signalling interest in companies that need palm oil and sugar, its main products.
Even though FGV reported a net loss of 142.3 million ringgits for the quarter, compared with a loss of 3.37 million ringgits in the same period last year, the company is showing positive signs of an economic recovery, that we hope, will extend to the global market as a whole.
($1 = 4.3540 ringgit)