By Mei Mei Chu
KUALA LUMPUR, March 19 (Reuters) - Malaysia's palm oil supply will see little impact despite a skeletal workforce as the country begins a two-week restricted movement order to curb the spread of the coronavirus, planters said.
Plantations, millers and refiners were forced to stop work on Wednesday in compliance with government orders to close borders, shut non-essential businesses and restrict internal movements from Wednesday until March 31.
On Thursday, the commodities minister confirmed that palm plantations, millers and refineries would be exempt from the order.
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% of global edible oil exports.
"The decision of the Malaysian government ensures that the industry continues to produce sufficient supply of palm oil to cater to the needs of the public," Sime Darby Plantation , the world's largest palm oil plantation company by planted area, said in a statement Thursday.
FGV Holdings, the world's largest producer of crude palm oil, said its plantation sector has resumed activities with a minimal workforce while its logistics department would continue to deliver the commodity to refineries and its distribution network.
Palm oil analysts had estimated that Malaysia's crude palm production would drop by 350,000-700,000 tonnes for the month of March if harvesting was paused for two weeks, raising concern over global edible oil supplies.
"Following the cabinet’s favourable decision, we see minimal impact on planters’ earnings and industry revenue from the one-day closure of estates and mill operations," Ivy Ng, regional head of plantations research at CIMB Investment Bank, said in a note to clients.
Malaysia reported 110 new coronavirus cases on Thursday, pushing its tally up to 900, making it one of the worst-hit countries in Asia.
As concern about supply eased, the market is now gripped by worry over a slump in global demand as the fast-spreading virus has now infected more than 212,000 people in 164 nations, triggering emergency lockdowns and raising fears of a global recession.
Exports for March 1-20 will likely drop 20% from the month before, compared with initial expectations of a 10% increase, said Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur.
Malaysian benchmark palm oil contract may plunge to 1,849 ringgit per tonne in the next quarter, Reuters technical analyst Wang Tao said. (Reporting by Mei Mei Chu Editing by Robert Birsel)