GLOBAL demand and export for palm oil products will see a strong recovery from April to June 2021, mainly shipped to India and China, both of which are severely under-stocked at the moment, a palm oil analyst said.
Singapore-based Palm Oil Analytics owner and co-founder Dr Sathia Varqa said buyers are waiting for the prices to go down in order to make their bookings, and India will be the leader in buying palm products this year despite the high prices.
“Prices have been high mainly due to lower supply in Malaysia as the global market looks at Malaysian supply and demand dynamics in pricing the crude palm oil (CPO), as well as higher global edible oil prices,” he said at the virtual Palm Oil Internet Seminar 2021 yesterday. As for China, Sathia said stocks
in the republic have been in deficit for many months and the latest data showed that stocks were in deficit by 27%. Malaysia and Indonesia exported a total of 6.3 million tonnes of palm products to China in 2020, he added.
“The exports will increase to 6.6 million tonnes in 2021 to make up for the shortfall with main exports will be from Malaysia as the country has more competitive CPO price compared to Indonesia,” he said.
Meanwhile, Shanghai Pansun Co GM Cai Neng Bin said the prevention and control of the African swine fever is still affecting China’s soybean crushing volume and this has promoted the potential growth for palm oil imports and consumption.
“Reduction in the production of many types of oils and fats has caused a global supply shortage, which is expected to take more time to rebuild the inventory level.”
On the global demand, Sathia said the Covid-19 vaccine and massive fiscal stimulus give an injection to consumer spending that will gradually lift equities, markets and commodities.
Therefore, he said palm oil production in Malaysia is expected to rise by 2% to 19.5 million tonnes, while exports should grow to 3% to 17.7 million tonnes in 2021.
“Price should be lower from the second half of 2021, which will see a decline to RM3,300 a tonne from June onwards,” he added.
Meanwhile, CGS-CIMB Securities Sdn Bhd, in a research note, estimated palm oil exports to grow 25% month-on-month in March 2021, likely due to stronger demand from India as a result of restocking activities and palm oil’s attractive discount against other competing edible oils.
“The demand for palm oil is likely to stay strong ahead of the Ramadhan celebrations in mid- May 2021,” it said.
Last month, the CPO price peaked at RM4,247.50 per tonne, an all-time high in the country’s palm oil industry history.