GAPKI deputy chairman Togar Sitanggang said on Dec. 2 that CPO prices were projected to range from US$1,000 to $1,250 per ton at least for the first half of 2022.

“CPO prices are expected to remain around $1,000 for the entire first half of 2022 and possibly until the end of next year,” Togar said, speaking at an event titled the Indonesian Palm Oil Conference (IPOC) 2021 and 2022 Price Outlook.

According to the global benchmark Bursa Malaysia Derivatives, the CPO price was 5,175 ringgit ($1226.3) per ton on Dec. 2, a massive increase from this year’s low of 3,470 ringgit per ton on Jan 20.

Read also: CPO output decline to continue in 2022: Gapki

Separately, state-owned Bank Mandiri estimated the Malaysian CPO price would correct from an average $1,050 per ton in 2021 to $879 per ton in 2022.

Bank Mandiri industry and regions analyst Andrian Bagus Santoso expected several factors, including a less accommodative monetary policy of the United States Federal Reserve and CPO output exceeding consumption growth, to cause a correction in CPO prices next year.

“We saw a pattern of declining global commodity prices during the [Federal Reserve’s] tapering in 2013,” he told The Jakarta Post on Friday, referring to a reduction in asset purchases by the US central bank.

The US Department of Agriculture forecasts global CPO production growth of 4.9 percent to roughly 76.5 million tons in 2022. Global CPO consumption, on the other hand, is only expected to grow by around 2.7 percent in the same period, which would put pressure on prices.

Read also: Analysis: Recovery of CPO demand

Capital market analyst Lucky Bayu Purnomo said CPO prices appeared to be weakening as the prices of several major commodities, including crude oil and gold, had declined in the past month.

“The CPO price is likely to decline from the beginning of 2022 to the middle of the year,” he told the Post on Friday.

The bellwether Brent crude oil price has tumbled to around $70 a barrel from October's three-year high above $86. Prices last month registered their biggest monthly decline since the start of the COVID-19 pandemic as the Omicron variant raised fears of an oil glut.

Indonesia’s oil price benchmark ICP rose 13.29 percent month to month (mtm) to $81.80 per barrel in October, Energy and Mineral Resources Ministry data show.

Read also: OPEC+ weighs output policy as Omicron fears hammer prices

Offering a similar projection, Dorab Mistry, director of consumer goods company Godrej International Ltd., said he expected a correction in CPO prices in 2022 due to a possible palm oil shortage in producing countries.

“Apart from the production factor, the palm oil price will be influenced by the US soybean production,” said Dorab, speaking at the same conference on Dec. 2. He added that palm oil supply and demand would continue to increase, noting that a high price level would also mean high volatility.

“Palm oil production in Malaysia will recover after Ramadan next year,” he said.

Meanwhile, Togar estimates Indonesia’s palm oil exports will reach 34.44 million tons in 2022, which would be up 3.19 percent from 2021, while production is expected to jump 2.95 percent next year to 48 million tons.

Economic Research Institute for ASEAN and East Asia (ERIA) energy economist Alloysius Joko Purwanto, on the other hand, expected total CPO production to reach 54.7 tons in the following year.

“A CPO price correction is to be expected if the economic recovery in 2022 is not as fast as predicted, which would slow down demand growth,” he told the Post on Friday.

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