MARKET DEVELOPMENT
Global vegoils prices set to fall in 2022 on strong output recovery –Mielke
Global vegoils prices set to fall in 2022 on strong output recovery –Mielke
17.10.2021 (www.nasdaq.com) - By Mei Mei Chu and A. Ananthalakshmi
KUALA LUMPUR, Oct 18 (Reuters) - Global vegetable oil prices, which have hit multi-year highs in recent months, are set to decline during the first half of 2022 due to a strong recovery in production and inventories, leading analyst Thomas Mielke forecast on Monday.
The decline is likely to start in the next two weeks and gain momentum in 2022, led by sunoil, palm and soyoil, the head of Hamburg-based analyst firm Oil World said in an online seminar.
Benchmark prices of crude palm oil FCPOc3, the world's cheapest and most widely used edible oil, have already skyrocketed 37% this year to record highs above 5,000 ringgit ($1,202.79) a tonne as a labour shortage hammered output.
"The high prices are not sustainable, the stage is set for a sizable recovery in production and a recovery in stocks (of global vegetable oils) on the assumption of normal weather conditions, and that the recent decline in Malaysian palm oil production can be reversed," he said.
Lofty prices have encouraged farmers worldwide to boost oilseed plantings this year, which will lead to a global production surplus in oilseeds, Mielke said.
"After two years of tightness, world production of oils and fats is set to increase by about 8 million tonnes in 2021/22, which is a four-year high," he said. Most of the growth would be seen in palm oil, sunoil and soy oil.
Mielke forecast global palm oil production to increase by 3.5-4 million tonnes in the 2021/22 crop year to almost 80 million tonnes.
Output at top producer Indonesia will rise by 1.7-2 million tonnes, while Malaysia - the second-biggest producer - is seen recording growth of 1-1.2 million tonnes, he said.
However, Mielke forecasts Malaysia's production in 2021 to fall to 18.2 million tonnes or less, compared with 19.1 million tonnes last year.
Due to the shortfall in production, the Malaysian Palm Oil Council pegged the 2021 average crude palm oil price at 4,131 ringgit ($994.82) a tonne, up from 2,685.50 ringgit in 2020.
"Prices will remain above 4,600 ringgit per metric tonne at least until the end of 2021," MPOC chief executive Wan Zawawi Wan Ismail said.
($1 = 4.1570 ringgit)
(Reporting by A. Ananthalakshmi; Editing by Christopher Cushing and Stephen Coates) https://www.nasdaq.com/articles/global-vegoils-prices-set-to-fall-in-2022-on-strong-output-recovery-mielke-2021-10-18