Palm oil production in the worlds top two producing countries is expected to recover and drive volatility in prices this year, which are likely rise to nineyear highs, a Reuters poll showed.
Malaysias benchmark palm oil contract kicked off the year at near decadehigh levels of 3,800 ringgit 940.13 due to a supply crunch in global edible oils.
Prices are, however, forecast to average at 2,800 ringgit 694.96 a tonne this year, its highest since 2012, compared with 2,685 ringgit last year, according to the median estimate from a poll of 18 analysts and industry players.
2021 is going to be more turbulent. The market is expected to face more volatility because crude palm oil price has gone way beyond expectations, said Christopher Chai, general manager with Kwantas Corp.
Global palm oil output contracted last year after La Ninainduced heavy rains and a labour shortage exacerbated by the pandemic hurt supply in Indonesia and Malaysia, which contribute 85 of world production.
Production is expected to recover in the second half of this year as heavy rainfall and better fertilisation due to high prices boost palm fruit yields.
Indonesias production in 2021 is seen rising 1.8 from the year before to 48.3 million tonnes. Rival Malaysias production is pegged to rebound by 2.4 to 19.6 million tonnes, according to the poll.
Palm prices will slightly decline in the third quarter as production recovers and the pandemic situation improves, said Sahat Sinaga, Acting Chairman of…