Palm prices seen firm until Feb, but could ease from March –analyst Mistry

Reuters

Published Sep 25, 2021 09:41

Updated Sep 25, 2021 11:05

By Mei Mei Chu and Rajendra Jadhav

PANAJI, India (Reuters) -Malaysian crude palm oil prices, which have hovered near last month's record highs, will stay firm until February, but start to ease from March, on rising output in the top two producer nations, leading industry analyst Dorab Mistry said on Saturday.

Benchmark crude palm prices have jumped nearly a quarter this year, rallying for a third consecutive year as a pandemic-induced labour shortage crimped output in Malaysia, the world's second largest producer.

The contract touched a record of 4,560 ringgit a tonne in mid-August, but the high prices have hurt demand in price sensitive markets, such as India, the world's top buyer of edible oils.

Mistry, the director of Indian consumer goods company Godrej International, unveiled a bullish outlook for the next five months, because of Indonesia's high export levy and a peak in supply tightness expected at the start of 2022.

He pegged palm oil prices in a range from 4,000 ringgit to 4,400 ringgit during October to February before they ease in March.

"High prices (will) finally end from April 2022," Mistry said at the Globoil India conference in the resort state of Goa.

He forecast prices to decline from 3,800 ringgit to 3,200 ringgit during April to September, underpinned by Indonesia's biodiesel mandate and export levy.

"Palm oil production in Malaysia will only recover post-Ramadan in 2022," Mistry said. The Muslim holy month is expected to begin around April 2.

Mistry lowered his 2021 estimates for Malaysia's production to 18.2 million tonnes. Production next year is likely to rise to 19.2 million tonnes if the government alleviates the acute labour crunch, he said.