Palm oil plantation operators have been enjoying a stellar 2020 especially in the third quarter with the rise in CPO price coupled with solid harvest. Average price has been hovering above RM3000 per tonne giving our number one commodity export a much needed boost amidst the pandemic. The momentum is expected to continue into 2021, where according to Malaysia Palm Oil Council exports are set to improve by 12.5 per cent to 4.5 million tonnes from an estimated 3.67 million tonnes last year.
Chief executive officer Datuk Dr Kalyana Sundram said CPO prices are set to stay above the RM3,000 per tonne level amid concerns of supply limitations due to the monsoon season.
“We forecast the average CPO price to be at RM3,650 per tonne for the first quarter of 2021, ranging from a low of RM3,500 per tonne to a high of RM3,850 per tonne,” he said.
As for the country’s CPO production, he said it is estimated to improve slightly to 19.6 million tonnes this year versus 19.4 million tonnes in 2020.
Countries that show strong demand for our CPO will be India, Netherlands, and Kenya with exports to India forecast to increase to 2.55 million tonnes against 2.04 million tonnes recorded last year. Dr. Kalyana noted that the January 2021 delivery price for CPO has already exceeded RM3,800 per tonne, and despite the reinstatement of CPO export duties, prices are expected to remain firm on concerns of supply limitations due to the heavy rainfall in January and February impacting production.
Malaysia has set the export tax for CPO at eight per cent this month, marking the end of the zero export tax enjoyed from June to December last year, which was intended to raise the value of Malaysian palm exports to other countries, especially India.
Demand is also expected to come from the Middle East and North Africa (MENA), South Asia and Uzbekistan, Sub-Saharan Africa, European Union and Eastern Europe regions, he said.
Focus will also be on China which has been showing positive economic improvement — with an estimated 8.2 per cent Gross Domestic Product (GDP) growth this year — will only lead to increasing per capita income and drive up palm oil demand, especially for bakery and confectionery fats in China. The other region that will increase orders will be MENA, as the higher intake of palm oil in the food processing industry and the growth of the HoReCa (hotel/restaurant/cafe) sector to cater to tourism industry needs in Turkey, Egypt and Saudi Arabia would create more opportunities for palm oil exports.
The recent signing of RCEP or the Regional Comprehensive Economic Partnership will open our CPO with trading partners in ASEAN, Australia, China, Japan, South Korea and New Zealand. Apart from that the change in mindset especially in Vietnam towards a more health-conscious diet switching from animal fats to vegetable oil will effect positively towards palm oil.