Newly released market study: Malaysia Agribusiness Report Q3 2016

Malaysia's agribusiness sector is experiencing challenging times, as its most emblematic sector, the palm oil industry, is undermined by low prices and growing structural challenges. The cocoa sector is in an even worse position, suffering a severe decline after the stellar performance of the 1990s . The cocoa processing sector is facing increasing competition from Indonesia and is losing market share at a fast pace. The medium - term outlook is brighter, amidst strong growth prospects in the poultry sector and opportunities for value added palm based oleochemical exports. Malaysia will have to remain ahead of its biggest competitor, Indonesia, if it s agribusiness sector is to stay afloat. As such, the next challenge for the country resides in the economic integration of ASEAN. The ASEAN Economic Community will present so me opportunities, for example for poultry exports. However, it also poses risks to the future of the sugar refining sector.

Full Report Details at
- http://www.fastmr.com/prod/1182854_malaysia_agribusiness_report.aspx?afid=301

Key Forecasts

Palm oil production growth to 2019/20 : 12.4% to 22.3mn tonnes. Production growth will reaccelerate towards the end of our forecast period, after the slower growth recorded in recent years. The ongoing replanting and yield improvement programmes will bear fruit and support output.

Poultry production growth to 2019/20 : 18.8% to 1.7mn tonnes. After a decade of strong growth, we forecast poultry meat production to grow at a moderate pace in the coming years, as rising production costs is undermining the development of the sector. Malaysia will maintain a fragile self-sufficiency in poultry.

Sugar consumption growth to 2020 : 13.7% to 1.9mn tonnes. Consumption growth will be slower than in the previous decade as it already comes from a high base, Malaysians being among the largest consumers of sugar on a per capita basis. Future sugar demand will be driven mainly by rising incomes and population growth.

2016 BMI universe agribusiness market value : USD29.61bn, up 8.7% y-o-y, forecast to grow by 5.2% annually from 2016 to 2020.

2016 real GDP growth : 4.6% (down from 5.0% in 2015, forecast to average 4.6% from 2016 to 2020).

2016 consumer price inflation : 2.7% (up from 2.1% in 2015, forecast to average 2.3% from 2016 to 2020).

Key Developments

The 2015-2016 El Nino episode, which emerged in May 2015 and ended in May 2016 according to the Australian Bureau Of Meteorology will have a strong impact on Malaysia's palm oil production in 2015/16. The phenomenon led to two waves of drier than usual weather, in August-September 2015 and in January-April 2016, as well as to forest fires in Indonesia which created a thick haze over Malaysia. As such, we forecast palm oil output to decrease by 1.9% in 2015/16 (October 2015-September 2016). Production will pick up in towards the end of 2016 and output in 2016/17 will rebound strongly.

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