Fitch Ratings expects crude palm oil to average US$850 a tonne in 2023
28/12/2022 (The Edge Markets), Kuala Lumpur - Malaysian benchmark crude palm oil (CPO) spot prices will average US$850 (RM3,763.80) per tonne in 2023, significantly lower than US$1,175 per tonne in 2022, according to Fitch Ratings.
In a statement on Tuesday (Dec 27), the rating agency said benchmark prices have rebounded to above US$850 per tonne in the fourth quarter of 2022 (4Q2022), from the end-September level of around US$700 per tonne.
“We expect prices to strengthen further in 1H2023 (the first half of 2023) to above the US$900 per tonne level.
“The outlook for palm oil demand growth has been boosted by Indonesia’s decision in December 2022 to increase the share of palm-oil based fuel in diesel.
“However, we expect supply to increase from 2Q2023 and cause prices to drop in 2H,” it said.
Fitch said foreign worker availability in Malaysia is gradually improving and that it expects the situation to normalise by mid-2023.
“We also expect healthy soil moisture conditions and lower flooding-related disruptions to support output,” it said.