KUALA LUMPUR : State agency the Malaysian Palm Oil Council (MPOC) on Wednesday lowered its production outlook for the world's second largest producer and pegged prices to remain above 6,000 ringgit ($1,367.37) a tonne this year.
MPOC forecast Malaysia's 2022 production at 18.6 million tonnes, up from 18.1 million tonnes in 2021 as migrant workers are expected to enter and help ease a labour shortage at plantations.
The world will see higher demand for oils and fats in 2022, and global palm oil dependency will continue to rise, said Mohd Izham Hassan, MPOC deputy director.
"Oils and fats exports in 2022 will likely be close to 97
million metric tonnes and palm oil share could be as high as 60 per cent," he added.
Global vegetable oil prices, including palm oil, have rallied to records this year as Russia's invasion of Ukraine disrupted sunflower oil shipments and export restrictions in top producer Indonesia further squeezed global supplies.
"Lower than expected supplies, higher demand, volatility of Brent crude oil prices and geopolitical tensions remain factors in determining price direction," Mohd Izham said.
MPOC pegged Malaysia's benchmark palm oil prices to remain between 6,500-6,800 ringgit until the end of July, and ease to 6,300-6,500 ringgit until September due to the resumption of Indonesian exports, Mohd Izham said.
"A price correction for all vegetable oils is expected to take place by late Q4 of 2022 but palm oil will likely be traded above 6,000 ringgit per metric tonne," he added.
($1 = 4.3880 ringgit)