With labor shortages and high fertilizer prices predicted to restrict palm oil production, the Council of Palm Oil Producing Countries (CPOPC) expects prices to remain high. The organization does not expect Indonesia’s and Malaysia’s output to increase. Those countries supply 85% of the palm oil to the world.
“Production of palm oil will remain constrained with limited upside potential, and prices will likely continue to trade in the bullish range of $1,000 per MT,” CPOPC said.
Higher soybean oil output could constrain any palm oil price increase in 2022.
Due to high fertilizer prices, smaller farmers are likely to reduce applications and supplies might be challenging for plantations to get. Palm oil yields did not increase when farmers decreased fertilizer in 2018 and 2019.
On the demand side, CPOPC forecasts the European Union’s palm oil imports will increase the most for 2021-22 compared to 2020-21, up 700,000 MT. China is expected to import 400,000 MT more supplies in 2021-22 from 2020-21 levels. India is expected to import 100,000 MT more in 2021-22 compared to the previous year.
