Malaysian Covid-19 lockdown likely to hit palm oil sector

17 Mar 2020 | Rei Geyssens

The two-week movement restriction in Malaysia ordered by the Prime Minister on Monday evening could spell disaster for the palm oil industry in the world’s second-largest producing nation.

The movement control order is meant to halt the spread of the novel coronavirus Covid-19, but will stop workers from entering palm plantations as the sector is not considered as an essential service under the current order.

“We are taking the necessary safety measures in line with Malaysian Government’s Movement Control Order,” the Malaysian Palm Oil Council said on Twitter as it plans to close its offices until the end of March.

Malaysian Prime Minister Muhyiddin Yassin ordered the nation to limit non-essential operations and bar foreigners from entering the country for a two-week period which will enter into force on March 18.

Meanwhile, the Malaysian Palm Oil Association continued to lobby its government to exempt the palm oil industry.

“The Malaysian Palm Oil Association is appealing the government to allow plantations and refineries to operate during the restriction movement order in view of its importance to the national economy,” the association said in a statement on Tuesday.

The Malaysian palm oil industry is at risk of losing out on producing and deliveries as well as lose new palm oil business to number one producer Indonesia.

The worries about a potential crackdown on logistics in the palm oil sector lifted Malaysian palm oil futures after Monday’s slump, as the May contract closed 1.4% higher at MYR2,250/mt ($517.48/mt).