Palm oil prices rise on rising demand from China and India

Palm oil prices are expected to rise due to increased demand from India and China and a drop in supply due to labour shortages caused by the pandemic, according to The Star.


CGS-CIMB's head of detailed research, Ivy Ng, told The Star that prices will touch a three-year high this year - the commodity is expected to reach RM2,500 per tonne by the close of 2020, the highest level since 2017.


Droughty weather has led to a drop in yields in Indonesia and Malaysia, labour shortages due to global value chains and rising demand from India and China have combined to send prices soaring.


"This year has been the most volatile year for crude palm oil prices. Earlier this year, crude palm oil prices spiked to over RM3,000 per tonne due to supply concerns in Malaysia due to weak production in the fourth quarter of 2019 and first quarter of this year, as well as Indonesia's latest biodiesel directive.


"Then, the COVID-19 outbreak in March sent prices below RM2,000 per tonne due to supply chain disruptions and MCOs in many countries around the world.


CPO's recovery was stronger than expected in May. On a nine-month average, crude palm oil prices averaged RM2,546 per tonne, higher than the 10-year average of RM2,530.