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KUALA LUMPUR (October 27): Fitch Solutions has revised its 2020 palm oil price forecast upwards to RM2,580 per tonne, from RM2,450 previously, as global palm oil production declined and demand for palm oil declined. Palm oil imports from India and China rebounded strongly.
The Fitch Ratings unit said today in a note that it expects palm oil prices to remain relatively high in the coming months, but to average slightly lower than current prices for the rest of the year.
“We are revising our 2020 price forecast upwards to RM 2,580 per tonne from RM 2,450 per ton previously, assuming an average of RM 2,600 per ton for the remainder of the year from current prices of RM 2,800 per ton.” He said.
He also said palm oil prices had proven resilient amid the Covid-19 crisis and are on track to be one of the only commodities to average higher year-over-year (YoY) (along with rice, wheat and coffee). ).
He opined that palm oil prices will increase due to a decrease in global palm oil production in 2019/20 (the period ending September 30, 2020) due to a delayed impact on trees, September 2019 to March 2020, from dry weather. registered in 2019.
Additionally, import demand from India and China rallied strongly month-on-month (month-on-month) from May to June onwards, after a sharp drop in demand due to Covid-19 related disruptions in January to April.
“Taken together, these factors led to a reduction in inventories,” he said.
Fitch Solutions also revised up its price forecast for 2021, but maintained its view that prices will stagnate on an annual average yearly basis.
“We now see prices averaging RM2,580 per tonne in 2021, compared to RM2,450 per ton previously. This will be above the 2015-2019 average of $ 2,424 per ton, ”he said.
Although global production will recover strongly in 2020/21, Fitch Solutions opined that economic activity will be stronger in 2021, along with restaurant sales and fuel use, which will support palm oil consumption.
“A continued recovery of palm oil imports by India and China and strong biodiesel production in Indonesia will keep prices steady next year,” he said.
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