High CPO prices expected to last until June

High demand and concerns over supply shortages would support prices to remain above the RM5,000 a tonne mark in the next few months 


CRUDE palm oil (CPO) prices are expected to remain high above RM5,000 a tonne at least for the first half of this year driven by festive season demand and tight global edible oil supplies. 

Malaysian Palm Oil Board DG Datuk Dr Ahmad Parveez Ghulam Kadir said the current CPO price, which recently reached a high of more than RM8,000 a tonne for the spot-month contract, will gradually decline in the near term barring any further crises. 

Ahmad Parveez added high demand for CPO and concerns over supply shortages would support prices to remain above the RM5,000 a tonne mark in the next few months. 

“I think this is the peak (above RM8,000 a tonne). If there is another crisis in addition to the Russia-Ukraine conflict, CPO prices could rise beyond that high. 

“I doubt the price of CPO will remain above RM7,000 a tonne for the long term,” he said during the 2022 Palm & Lauric Oil Conference in Kuala Lumpur yesterday. 

He added the high CPO price has not affected demand for palm oil in the country — especially from the world’s largest consumer India —despite recent news reports suggesting Indian buyers were turning easy due to the high prices. 

Ahmad Parveez said concerns over the impact of the Russia-Ukraine crisis on edible oil supplies were driving prices of other edible oil higher and demand for the upcoming festive season. 

In the physical market, the price of CPO hit a historic high of RM8,400 a tonne recently 

but the benchmark three months forward futures contract on Bursa Malaysia Derivatives Exchange closed RM208 lower at RM6418 a tonne yesterday. 

The Russia-Ukraine conflict has affected exports of sunflower oil and other grains from the Black Sea region, thus making palm oil an option for vegetable oils buyers. 

The Council of Palm Oil Producing Countries ED Tan Sri Datuk Dr Yusof Basiron said countries producing palm oil must find ways to increase palm oil production sustainably in overcoming the projected global shortages. 

He added the decline in the expansion of oil palm acreages in recent years has created a shortage and resulted in high prices affecting consumers around the world. 

“Palm oil is the most sustainable crop to plant to meet the future demand for oils and fats to feed the growing world population. It (palm oil) is the most suitable crop to plant with minimal conversion of degraded forest land where the land carbon stock will be re-established by the oil palm as a tree crop,” he said during the conference. 

Yusof said the palm oil industry is well organised to meet future challenges, and expects technology as well as modernisation to transform the industry moving forward. 

He added palm oil production is far more environmentally friendly than other competing oils because its high yield makes it less land-intensive compared to other oils. 

“As a tree crop planted on agricultural land, oil palm plantations are a net sequester of CO2. Oil palm like the plantation forest will help countries to achieve net-zero emissions faster. 

“Oil palm crop is the most contributively to the attainment of Sustainable Development Goals (SDGs) objectives, where 13 out of 17 SDGs goals are positively impacted by palm oil. No other oil crop can claim such a feat,” he stressed.