File Photo[/caption] The Council of Palm Oil Producing Countries (CPOPC) announced that palm prices are expected to remain strong next year as production will be limited due to rising fertilizer costs and a prolonged labor crisis. The sector is already experiencing slower yields after farmers reduced their use of fertilizers in 2018 and 2019, and may suffer lower input again next year. CPOPC said it is expected to reduce the input of smallholders as nitrogen and phosphate prices have risen by 50% -80% since mid-2021, while plantation companies may face challenges due to supply constraints. "As a result, Indonesia and Malaysia may not be able to deliver much output growth in 2022," it said. The two countries collectively constitute 85% of the world's palm oil supply. Tight supply has already driven up prices of benchmark crude palm oil futures by 31% so far this year, with the contract hitting a record high of 5,220 ringgit ($1,252.25) a tonne. "Production of palm oil will remain constrained with limited upside potential, and prices will likely continue to trade in the bullish range of US$1,000 per tonne," CPOPC said, adding that the rally in 2022 could be dampened by higher soybean oil output. The council forecast China's palm oil imports to rise to 7.2 million tonnes in 2021/22, from 6.8 million tonnes in 2020/21, boosted by an economic recovery. Imports by India are estimated at 8.6 million tonnes in 2021/22, up from 8.5 million tonnes in 2020/21, while the European Union's imports are estimated to rise to 6.9 million tonnes from 6.2 million tonnes in 2020/21. CPOPC, however, warned that the impact from the Omicron coronavirus variant has cast doubts on demand recovery. |Source: Online/KSU
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