By Mei Mei Chu
KUALA LUMPUR, Dec 31 (Reuters) – Malaysian palm oil futures rose on Friday and were on course for a third straight annual gain, with tight production and robust demand expected to keep prices firm next year.
The benchmark palm oil contract FCPOc3 for March delivery on the Bursa Malaysia Derivatives Exchange gained 41 ringgit, or 0.88%, to 4,724 ringgit ($1,131.77) a tonne by the midday break.
Palm has jumped 31% so far in 2021 as a pandemic-fuelled labour shortage hammered output in the world’s second largest producer, while demand picked up after countries eased lockdowns. Prices are set to average around 4,149.57 ringgit ($994.62) this year.
“2021 has been a year of supply shortages and weather disruptions. Demand returned, but supply struggled to keep up,” Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics, said.
“High prices fuelled inflationary pressure in major importing countries warranting trade policy changes,” Varqa added.
Global demand for commodities is expected to remain robust in 2022 and underpin prices as the world economy continues to recover, although similar price jumps are unlikely, analysts and traders say.
Palm prices are expected to stay strong in 2022 as production will remain constrained due to soaring fertiliser costs and long-standing labour shortages, the Council of Palm Oil Producing Countries said on Thursday.
Dalian’s most-active soyoil contract DBYcv1 rose 0.7%, while its palm oil contract DCPcv1 gained 0.8%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.6%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil looks neutral in a range of 4,676 to 4,751 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said. TECH/C
($1 = 4.1740 ringgit)
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(Reporting by Mei Mei Chu; Editing by Subhranshu Sahu and Shounak Dasgupta)
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