Crude palm oil prices are falling amidst growing concern about the state of the global economy – and this may have electoral significance in Malaysia.

It has reached new lows for 2011. You can click the tabs to see the trends over different periods (2-year, 1-year, 6-month, 3-month and 1-month).

Supply of US crops in the months ahead looks favourable and this could lead to further price declines.

It spells bad news for the Najib administration, which is banking on high commodity prices to ensure that the feel-good sentiment among Felda settlers remains buoyant ahead of the next general election, widely expected within a year.

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23 COMMENTS

  1. Reuters report:

    Najib appointed veteran ruling party leader Shahrir Abdul Samad as Felda chairman in January, widely seen as a move to win back the settler’s support.

    “The overarching issue is how to get palm oil prices at sustainable, reasonable levels so the benefits can go to the smallholders,” Shahrir, a former federal minister, told Reuters in an interview.

    “We will ensure the welfare of the Felda settlers are taken care off…they will feel the pinch if they get a lesser monthly income,” he said.

    Salaries in 2016 dipped by 5 percent from two years ago to 3,393 ringgit ($770).

    The settlers are a crucial voting bloc for Malaysia’s ruling party, the United Malays National Organisation (UMNO), making up the majority of voters in 54 of the country’s 222 parliamentary districts.

    Najib barely secured enough seats to stay in power in 2013 after losing the popular vote and losing the settlers’ votes would pose a leadership and electoral challenge.

    Shahrir said Felda, which operates some of the world’s largest palm oil plantations, will work with Indonesia on marketing efforts to increase demand for palm oil.

    He said Malaysia, along with Indonesia through the Council of Palm Oil Producing Countries (CPOPC), will focus on markets in China, India and Africa, while increasing local utilization rates via biodiesel mandates.

    “The objective is to keep palm oil prices at a high or reasonable level,” he added.

    Indonesia and Malaysia, who produce about 85 percent of global palm oil, formed the CPOPC in late 2015 to manage prices and create demand through biodiesel mandates.

    But industry analysts say that current prices are not sustainable as global output should rebound from damage caused by last year’s El Niño phenomenon.

    Benchmark palm oil prices have dropped nearly 20 percent this year, and may drop further through the peak output period in August.

    Felda will sell non-core assets this year, including hotels in London and land in peninsular Malaysia, to raise funds for settlers’ housing subsidies that are estimated at 400 million ringgit, Shahrir said.

    Electoral Gains

    Shahrir said he visited six Felda regions and is confident that the settlers are still with the government.

    “You see a disconnect between what is said in social media and what is happening on the ground.”

    Najib’s ruling coalition is expected to win the next elections, which have to be called by August 2018. But Malaysians are unhappy with inflation at an eight-year high and the ringgit that has shed a quarter of its value since 2015.

    Critics have slammed Felda management’s efforts.

    “Shahrir has been the chairman for over 100 days now, but Felda’s finances are at such a critical state…I don’t see how he can do anything to make a change,” said Mazlan Aliman, president of the National Felda Settlers’ Children Society.

      • PGCC II by …
        PNTC was sold to … for Rm 1 billion.
        A new casino will be build there. 😉

      • How accurate is this info? And what is PNTC?

        I just checked with the relevant authorities and they told me no plans submitted for the area.

      • Anil, don’t be fooled. This is Photoshop-ed pic.
        Download and check the edges of the trees against the dubious buildings.
        What a cheap trick!

      • thanks for the info anonymous999 ….BN cronies cashing in again..anonymous999 is trying to show us the perspective plan of the coming project?i think…of couse is photoshop lah..

  2. Recent report in The Sun mentioned that 84% of Felda workers are foreign labours. So how does that help the locals to develop agricultural skills in general other than the owners of the land who sub out for sure profits ?

  3. Penang Indians, without Felda scheme benefits, should appreciate the unprecedented effort done by present state gomen to set up the newTamil primary school SJK(T) Azad at Waterfall Road enroute to the Botanic Garden !

    Previously, underprivileged Tamil pupils had to go to the cramped underground space of Indian Association building at Jln Bagan Jermal.

    The site is a prime land. Present Penang gomen rejected the approach from Toy Museum to be set up there and instead in favour of a new school there to care for the education of the needy.

    Can MICkey care to comment ?

    • MIC should consider buying up Magnum (and rename it Maikanum for old time sake) to derive the non-halal 4D revenue to help the Indians, now that the chinese community has got its saviour in Da Ma Cai!!!!!

      Felda folks has no worry since dpm has allowed PPSMI at Mara Institution for them to pursue tertiary education in UK.

  4. Anil,

    The deceitful and corrupted morons from Umno will (probably) one way or another subsidize the Felda settlers to make them feel good enough to vote for them.
    There is nothing you or any one can do about it and that why they are known as deceitful as they are comes rain or storm.

  5. Anil,
    “Crude Palm Oil has reached new lows for 2011.”
    What are you trying to imply???
    At RM2,993, it is still Better than 12 months (RM2,480) or 24 months (RM2,030) Ago!!!
    Even Crude Oil has Fallen Below US$90.00!!!
    Felda Settlers and Small Holdings ARE Still Happy!!!
    Trying to Blame the GOM???
    So…ooo TYPICAL!!!

    • Time to lower petrol price as well. Ain’t we following global market price?
      Quick to raise petrol price within days, but slow to lower price to match market price!
      Who are easily fooled nowadays?

  6. While some have made good, life in Felda for most settlers is still hard. More than half still live in their old wooden house, which is almost crumbling. They rely on the Manager for their subsidies, and everything else. That’s why they r the most bankable deposit for UMNO. Will they revolt? I don think so, they r tied to their managing units. These Managers will organise ceramahs from time to time and brainwash them. The only world they know is shaped by UMNO. Outsiders cannot get access to them. I think no matter how unhappy they r, they won cast a protest vote. At most they just don vote.

  7. Perhaps, Najib could look for Gold deposits and open new mines for these Felda owners….”Gua tolong lu, lu tolng gua”
    It is inevitable the global economy will go deeper in the red and the oil palm commodity will yet to taste the worst….especially, for small holders.

    • The next price drop for palm oil is inevitable as commodities price is a cycle with ups and downs.
      Back in 2001 when FFB was sold for less than RM 100 a tonne , many smallholders didn’t even bother to put fertilizer to trees and harvest the crop as the sales proceed could not cover their total cost including labor.

  8. A big chunk of Felda people own plantation of 5-10hectares. At 5 hectares, they were making about 4-5K per month earlier in the year, they are now making about 2.5K per month.. Big difference..

    • Actually all felda settlers were allocated 10 acres for the planting and a quarter acre for their residence in the township.

      Many settlers do not manage their own plantation but contract it out to felda who often (allegedly) suppressed their earnings. The typical earning is about RM 1500 /= per month. Many settlers were also saddled with huge debts from the planting/re-planting and the 4 years allowances before the trees bear fruits. It is an oppressive system where the settlers should manage their own ladang but don’t but instead preferred to be taken care of.

      The spirit of felda is no longer there. It has now become a means for felda to use the settlers to further its own pecuniary gain.

      • Anil, the suppressed earnings accusation is not alleged but had been proven in the court of law. The settlers took felda to court and won.

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