KUALA LUMPUR, April 30 (NNN-Bernama) — TH Plantations Bhd (THP) expects palm oil prices to remain high at least in the first half of 2021 (1H2021) and moderate in 2H2021 as production increases, stock level improves and global prices of oilseeds moderate.
According to its Annual Report 2020 released Friday, the company feels that factors that could affect pricing include COVID-19, which will continue to influence the overall price environment, but this effect will be mitigated by the rollout of the largest global vaccination programme in history.
“The consequences of the pandemic in 2021 will continue to be short-term labour shortages arising as a result of international border closures,” it said.
Besides, the ongoing impacts of the Indonesian B30 mandate will continue to support palm oil prices due to the huge quantity absorbed by the programme.
THP said China’s appetite for soy meal is expected to increase as the country continues to recover from the swine fever epidemic.
Other than that is continued anti-palm oil sentiment in Europe and the push to phase out palm oil biofuel usage by 2030 will be a drag on prices as the major economies of Europe focus on maximising their own oilseed production.
THP said while Malaysia’s palm oil production may not increase significantly in 2021, global production is expected to rebound, with Indonesian output likely to rise by up to 3.3 million tonnes.
“Despite increases expected in the production of oils across the board, total demand is projected to grow by five million tonnes in 2021,” it said.
THP said the price of palm oil is likely to stabilise in July 2021 and hold steady for the rest of the year.
“The palm oil sector remains strong, but a greater focus should be placed on the adoption of mechanisation and automation to further improve productivity.
“All players in the industry need to embrace innovation to future-proof their businesses and prevent being affected by supply shocks in the future such as the labour shortages arising from COVID-19,” it said.
Against this backdrop, THP anticipates a higher average crude palm oil (CPO) price for this year, as this will lead to better performance for the group.
Looking further ahead to the next five to 10 years, the company expects palm oil production growth will slow down due to limited opportunities to expand planting areas in the past few years.
“This will provide long-term support for oil palm prices,” it added.
— NNN-BERNAMA