KUALA LUMPUR, March 28 (NNN-Bernama) — Malaysia and Indonesia will be the focus of international oils and fats trade this year, supported by the projection of four per cent world economic growth and higher demand for vegetable oils, said the Malaysian Palm Oil Council (MPOC).
Chief executive officer Wan Aishah Wan Hamid said demand for vegetable oils is growing in tandem with the economic recovery but supply disruption has caused vegetable oil prices to record high levels, especially over the past few months.
“Palm oil price has skyrocketed in February 2022 and established new record highs, supported by current low stocks and lower production in the two major palm oil-producing countries, Indonesia and Malaysia,” she said in her presentation during the Palm Oil Internet Seminar (Pointers) Monday.
Themed “Assessing 2022: Managing Opportunities and Risks”, the seminar features six presentations covering topics such as supply and demand of oils and fats price and market outlook, opportunities for palm oil in Central Asia and the Middle East & North Africa (MENA) markets, among others.
The seminar runs from March 28 until April 1.
Wan Aishah noted that Indonesia and Malaysia contribute up to 85 per cent of the global palm oil production.
Among the other vegetable oils globally, 30 per cent of the oils and fats production comes from Indonesia and Malaysia as well.
She said MPOC forecast Malaysia’s crude palm oil (CPO) production to be at 18.9 million tonnes this year, up from 18.1 million tonnes last year.
Meanwhile, Indonesia’s CPO production is poised to derive at 47.1 million tonnes from last year’s 45.2 million tonnes.
On price forecast over the medium term, she said the Russia-Ukraine conflict remains the single biggest factor in price direction.
The price will likely remain between RM5,700 (RM1 = US$0.238) and RM6,300 per tonne level until May this year if the conflict drags on, she said.
As for the long-term price outlook, Wan Aishah said lower than expected supplies, higher demand, volatility of Brent crude oil prices, and geopolitical tensions remain key factors in determining price direction.
“It is forecast that there will be a price correction for all vegetable oils but only in the third quarter of 2022, but palm oil will likely be traded between the RM4,500 and RM5,500 per tonne level,” she shared.
Palm oil prices have been steadily rising since the third quarter of 2021 due to the lower than expected production in both Malaysia and Indonesia.
The conflict between Russia and Ukraine has resulted in a demand surge for palm oil as it is the most abundantly available.
As a result, the palm oil price increased by 21 per cent to US$1,990 per tonne on March 2, 2022, from the US$1,640 per tonne registered on Feb 25, 2022.
Palm oil, which is usually traded at a discount to soybean oil, has seen the price gap narrowing and eventually trading at a premium to soybean oil from Feb 28 until March 7, 2022.
Sunflower oil prices increased abruptly to US$3,000 per tonne from March 8 until March 10, 2022.
As for export destinations for palm oil for January-February 2022, export to India rose 32.56 per cent to 409,465 tonnes, China slipped 17.43 per cent to 163,148 tonnes, and Turkey jumped 125.96 per cent to 160,104 tonnes.
Meanwhile, exports to the Netherlands eased 4.7 per cent to 120,619 tonnes and Kenya (the fifth top highest export destination of Malaysian palm oil) soared 132.45 per cent to 112,902 tonnes.
Exports of Malaysian palm oil from 10 countries for the first two months of 2022 improved to 2.26 million tonnes from 1.85 million tonnes in 2021, up by 22.16 per cent.
— NNN-BERNAMA