Fitch Solutions Country Risk & Industry says that it was revising up again the palm oil price forecast to average MYR4,200/tonne in 2021, compared with a previous forecast at MYR3,800/tonne as the market remains tight. Prices have sky-rocketed in recent months, breaching the all-time highs reached in 2008.
The research house also revised up our 2022 forecast but continued to expect prices to correct significantly next year, averaging RM3,400/tonne, from a previous forecast at RM3,200/tonne. It says that the market will remain very tight in Q4 and into Q1 2022, as we see no immediate relief to severe labour shortages at Malaysia’s plantations.
Meanwhile, import demand remains strong as alternative edible oils prices have also spiked adding that in 2022, we forecast production conditions to improve as Malaysia is likely to ease some migrant labour travel restrictions as vaccination levels progress in the country, but we note this will take time to impact production.
It says that high palm oil prices should start to bite into demand and we believe the outlook for consumption in 2022 has deteriorated somehow in recent months.
“We see global consumption growth slowing down in 2022, to 2.7% y-o-y, compared with our forecast back in August of a 3.4% growth in consumption in 2022, and with the 3.4% growth expected this year. In particular, we have revised down our India’s palm oil consumption forecast,” the research house says.
