Malaysia exempts palm plantations from virus closures

A plantation worker collects palm oil fruits at a plantation in Pulau Carey, Malaysia. Caption text, Caption text, Caption text Caption text. (Reuters/File)
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Updated 19 March 2020

Malaysia exempts palm plantations from virus closures

  • Decision taken to ensure steady supplies to global markets
  • Closure of palm plantations as a part of the measures earlier had caused concerns in top importers, including India

KUALA LUMPUR, SINGAPORE: Malaysia has directed palm plantations to continue operations even as the country shuts businesses to prevent the spread of the coronavirus, a producer group said on Wednesday, ensuring steady supplies of the tropical oil to global markets.

Malaysia is the world’s second-largest producer of palm oil, which is used in everything from cosmetics to cookies and accounts for about 65 percent of global edible oil exports.

The country has closed its borders and restricted internal movement by shutting schools and businesses from Wednesday until March 31, after its tally of infections climbed to the highest in Southeast Asia, at 790 cases and two deaths.

Closure of palm plantations as a part of the measures earlier had caused concerns in top importers, including India.

But the commodities minister on Wednesday agreed to exempt palm plantations from the restricted movement order, Nageeb Wahab, chief executive of the Malaysian Palm Oil Association, told Reuters.

“The minister informed us that the Cabinet has reviewed our appeal and reasoning, and consented to allow the industry to resume operations with immediate effect,” Wahab said.

FASTFACT

● Malaysia is the world’s second-largest producer of palm oil.

● The country’s February end-stocks fell to 1.68 million tons, the lowest since June 2017.

Malaysian palm oil futures jumped 5 percent in early trade on supply concerns after plantations were forced to shut operations. Palm futures prices also rose in China and India.

Palm oil analysts had estimated that Malaysia’s crude palm production would drop by 350,000-700,000 tons for the month of March due to the harvest pause, potentially cutting March inventories to 1.0 million to 1.3 million tons.

India, the world’s top vegetable oil importer, could have taken a hit if the supply was disrupted, said Sandeep Bajoria, chief executive of the Sunvin Group, a Mumbai-based vegetable oil broker. He said India had less than a month’s supply.

India, which consumes about 1.9 million tons of edible oil a month, has 1.5 million tons at ports and in the pipeline traders said. The country on an average imports 1.25 million tons a month, the balance made up with domestic production.

China, the world’s second-biggest edible oil importer, has large inventories of soybean oil but stockpiles have started declining.

Malaysia’s February end-stocks fell to 1.68 million tons, the lowest since June 2017, according to data from the Malaysian Palm Oil Board.

Indonesia, the world’s biggest palm oil producer, has yet to take a decision on plantation closures, an industry official said.


Chile’s LATAM Airlines files for US Chapter 11 bankruptcy protection

Updated 58 min 30 sec ago

Chile’s LATAM Airlines files for US Chapter 11 bankruptcy protection

  • The company is the largest airline in Latin America
  • LATAM said they have about $1.3 billion in cash on hand

LATAM Airlines Group SA said on Tuesday the company and its affiliates in Chile, Peru, Colombia, Ecuador and US have filed for Chapter 11 bankruptcy protection in the United States, due to a slump in travel worldwide amid the coronavirus crisis.
Latin America’s largest airline said it secured funding from shareholders, including two of its largest the Cueto and Amaro families, and Qatar Airways, to provide up to $900 million in debtor-in-possession financing.
The company said it had about $1.3 billion in cash on hand.
“We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option,” Chief Executive Officer Roberto Alvo said.
LATAM Airlines Group listed assets and liabilities in the range of $10 billion and $50 billion, according to a filing with the US Bankruptcy Court in Southern District of New York.
The airlines and its affiliates will continue to fly with no impact on passenger or cargo operations and reservations, the company said.
The company said its affiliates in Argentina, Brazil and Paraguay were not included in the Chapter 11 filing.
LATAM Airlines’ Brazilian affiliates are in discussions with the Brazilian government about the next steps and financial support for operations in the country.