Fitch Ratings: Crude Palm Oil Prices Rebound in 3Q21 but Gradual Decline Likely

Fitch Ratings-Singapore/Jakarta-24 September 2021: Malaysian benchmark crude palm oil (CPO) prices will average USD1,000/tonne (t) in 2021, a similar level to the year-to-date average, factoring in a gradual decline from 4Q21, Fitch Ratings says in a new report.

CPO prices rose quickly to USD1,100/tonne (t) in July 2021 and have remained around that level, after falling below USD900/t in June, due mainly to sustained labour shortage and weak output in Malaysia.

Indonesia’s palm oil production has improved in 2021, in contrast to weaker Malaysian output, and we expect the trend to continue in 2022. Our view that current prices are unsustainable is also supported by factors such as Malaysia planning to permit foreign workers into the country to ease the labour shortage and the decline in soybean oil prices since August 2021.

However, the pace of price declines will depend on how soon the Malaysian labour shortage ends and output rebounds, as well as the price trajectory of competing oils such as soybean oil.

FitchRatings

Tags: Malaysia, palm oil, Malaysian benchmark crude palm oil, CPO prices, Indonesia's palm oil production, palm oil production, Indonesia, prices, Crude palm oil, Production