Fertilizer costs, shortage of labor is expected Palm oil prices to remain on high in the next year 2022 says CPOPC
According to the Council of Palm Oil Producing Countries (CPOPC), palm oil prices are projected to remain robust next year as output is restrained due to rising fertilizer costs and long-standing labour shortages.
Farmers cut fertilizer usage in 2018 and 2019, resulting in poor returns, and the sector may suffer from lesser inputs again next year.
According to CPOPC, smallholders are projected to reduce inputs as nitrogen and phosphate costs have risen by 50-80% since mid-2021, while plantation enterprises may encounter issues due to supply restrictions.
‘As a result, Indonesia and Malaysia may be unable to deliver significant output increases in 2022,’ the report concluded. The two countries account for 85 % of the world’s palm oil supply.
Limited supply has already driven up benchmark prices of crude palm oil futures by 31% this year 2021, with the contract reaching a new high of 5,220 ringgit (currency of Malaysia) ($1,252.25) per tonne.
‘Palm oil production will remain constricted with modest upside potential, and prices will likely trade in the bullish area of $1,000 per tonne,’ CPOPC stated, saying that the rally in 2022 could be muted by rising soybean oil output.
Supply is expected to down
The Council of Palm Oil Producing Countries predicts that India’s neighbor China’s palm oil imports would increase to 7.2 million tonnes in 2021/22, a rise from 6.8 million tonnes in 2020/21, due to economic recovery.
India is expected to import 8.6 million tonnes in 2021/22, rise from 8.5 million tonnes in 2020/21, while the EU (European Union) is expected to import 6.9 million tonnes, rising from 6.2 million tonnes in 2020/21. CPOPC, on the other hand, warned that the Omicron model has raised concerns about demand recovery.