KUALA LUMPUR (Feb 10): Malaysia’s palm oil sector risks lower yields over time if planters continue to delay replanting ageing trees, despite record crude palm oil (CPO) production in 2025, Malaysian Palm Oil Council (MPOC) chairman Datuk Carl Bek-Nielsen said.
High crude palm oil (CPO) prices have discouraged planters from replanting, as strong margins reduce the incentive to cut down older palms.
“High prices are one of the main reasons for planters’ reluctance to replant. When times are good, [planters tend to say], “Why not take one more year?” And one year often turns into two more years. That is why replanting is deferred because prices are good, margins are good, profitability is good — so why destroy that [by cutting down ageing palms]? That’s the problem,” Bek-Nielsen told The Edge at the 37th Palm & Lauric Oils Price Outlook Conference (POC) 2026.
Bek-Nielsen is also CEO and vice chairman of United Plantations Bhd.
Citing data from the Malaysian Palm Oil Board (MPOB), Bek-Nielsen noted that about 1.7 million hectares, or roughly 30% of Malaysia’s oil palm area, is now 19 years or older, with the share expected to rise to 35%, or more than two million hectares, by 2027.
“The older palms typically deliver lower yields due to missed fruit bunches, higher disease risk and declining stand density, so yield will ultimately come down over time,” he noted.
Bek-Nielsen added that Malaysia has the potential to lift crude palm oil (CPO) production from 20.3 million tonnes to 26 million tonnes, an increase of 5.7 million tonnes, without any deforestation through replanting and improved agricultural practices.
He said this would require replacing lower-yielding, ageing palms with high-quality seed materials, which have a solid track record of high yields on large commercial plantings and enforcing more disciplined management.
“The biggest game changer is replanting with high-yielding seed materials. If you take out those lower-yielding palms and replant with new plant material, this would automatically raise CPO yields per hectare,” he said.
Against this backdrop, Bek-Nielsen believes the target to increase the country’s CPO per hectare by one tonne to 4.5 tonnes per hectare by 2035 is realistic if replanting and good agricultural practices are properly implemented.
He noted that Malaysia’s record CPO output of 20.28 million tonnes in 2025 was largely driven by the resolution of acute labour shortages, which allowed estates to harvest crops more effectively.
On the regulatory front, Bek-Nielsen said Malaysia’s palm oil industry is prepared for the European Union’s deforestation regulation (EUDR), which has been delayed until end-2026.
He added that while European buyers remain cautious due to policy uncertainty, EUDR poses no threat to Malaysian palm oil, which he described as the most sustainable vegetable oil globally after two decades of sustainability initiatives.
“Malaysian sustainable palm oil is the most sustainable vegetable oil globally. We have embraced sustainable measures for the last 20 years, and that is now paying off. EUDR is not a threat to Malaysian palm oil — we can flood the European market with sustainable palm oil. The EUDR would become a huge stumbling block for cocoa and coffee farmers, not for Malaysian palm oil.”
CPO price to range between RM3,900 and RM4,300 per tonne
Bek-Nielsen projects CPO prices to range between RM3,900 and RM4,300 per tonne this year, subject to the ringgit staying above RM3.90 against the US dollar and good weather conditions.
He noted that the land confiscation in Indonesia that was used illegally for palm oil could tighten supply and support CPO prices.
Indonesia has reportedly seized more than four million hectares of land that was used illegally for mining, palm oil and forestry activities last year.
At 5pm, the benchmark of palm oil futures for May delivery stood at RM4,103 per tonne on Bursa Malaysia Derivatives (BMD).
Source: The Edge Malaysia
