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Limited supply to prop up 2023 CPO prices, but global uncertainty clouds outlook
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Workers transport oil palm fruits onto trucks from a plantation operated by PT Wanasawit Subur Lestari in Pangkalan Bun, Central Kalimantan, on Dec. 19, 2015. (JP/Dhoni Setiawan)
C
rude palm oil (CPO) prices are unlikely to fall back to recent lows next year as production levels off, according to experts, but a number of global uncertainties complicate the outlook.
Third-month CPO futures on Malaysia’s commodity exchange fell to 3,417 ringgit (US$737.06) per ton on Sept. 30, an 18-month low. Prices have risen 8 percent since then to close at 3,701 ringgit per ton on Oct. 6.
Oil World executive director Thomas Mielke said geopolitical developments, the ongoing war in Ukraine, climate concerns, as well as inflation and recession fears would complicate next year’s forecast, but a worldwide leveling off of palm oil production growth was expected to support prices.
“In the years ahead, global demand for Indonesian palm oil will rise due to insufficient growth of palm oil export supplies in Malaysia and the rest of the world,” he said during the International Palm Oil Conference (IPOC) 2022 and 2023 Price Outlook event in Bali on Friday.
Oil World forecast that palm oil output would grow by 300,000 tonnes in Malaysia and 2.2 million tonnes in Indonesia in 2023.
He predicted that annual growth would slow to 2.3 to 2.5 million tonnes in the 2020-2030 period, largely due to a lack of replanting and new planting, as well as harvest losses.
The average annual growth in the 2010-2020 period was 2.9 million tonnes.
