Southeast Asian Palm Oil Harvests Hit by Rising Diesel Costs

Rising diesel prices and fuel shortages are forcing smallholders in Malaysia’s Sabah and Sarawak states and Indonesia’s Sumatra to cut back on palm fruit collection, threatening the output of the world’s most widely used edible oil. Diesel subsidies in Malaysia cover only a fraction of the fuel needed for the rugged interior plantations, leading farmers to reduce harvesting rounds from about 2.5 per month to 1.5. The disruption comes as El Niño conditions loom, which could further dent yields.

Palm oil futures have risen on expectations of strong exports, with the benchmark contract for October delivery gaining 0.17% to 4,704 ringgit. However, softer soybean‑oil and crude‑oil prices are weighing on market sentiment. Traders such as David Ng of Iceberg X Sdn. Bhd. note that weaker crude oil makes palm oil a less attractive biodiesel feedstock, while export demand from India and the EU remains robust.