THE palm oil industry outlook is expected to be rosier this year with business resumption, improved production by producers and higher consumption in traditional markets, a plantation expert said.
“Palm oil prices will rise despite already having increased by 40%, and it is finally coming back, tracking more market share. This could also be due to the COVID-19 vaccine availability.
“In India, for example, which is the largest palm oil buyer, vaccine is the key to growth and the Indian pharmaceutical industry is very good and innovative,” said Godrej International Trading & Investments Pte Ltd director Dorab Mistry in the third day of the virtual Malaysian Palm Oil Trade Fair and Seminar 2021 (POTS Digital 2021).
Following that, the Indian government expected strong demand growth in 2021, he said, adding that the Indian currency is stronger at present.
As for China, Dorab said the Chinese is consuming more good quality vegetable oils and reducing consumption of animal fats.
“Chinese consumers are more health-conscious and discarding used cooking oil faster,” he said.
At the close of trading yesterday, crude palm oil (CPO) futures contract on Bursa Malaysia Derivatives continued to rally for a third consecutive day with the benchmark March 2021 closing at a fresh high of RM3,877 per tonne.
It breached above RM3,800 per tonne, the highest level recorded since February 2011.
On production, Dorab said palm oil production in 2020 was below expectations, but it would likely recovery in the second half of 2021.
He estimated Malaysia’s palm oil production to hit 20 million tonnes while Indonesia was projected to record 50 million tonnes – a total jump of about four million tonnes from 2020.
“The crop production would eventually recover post-Ramadan month (April/May) and this would lead to lower prices,” he added.
He also predicted the commodity to stage a short, sharp correction in early January-February before recovering and rally again.
“The year 2021 will be a year of two halves. But overall it will be a good-to-great year for the world economy.”
Oil World executive director Thomas Mielke shared the same views with Dorab, saying that he sees a moderate setback for palm oil this year.
However, he voiced concern in terms of production due to labour shortage, which he hoped would push for higher investments in mechanisation in 2021 and 2022.
“Global demand for palm oil will recover in 2021. Satisfying world import demand requires Indonesia to increase its exports by 2.1 million tonnes this season,” he added. – Jan 7, 2021