New Delhi — Global vegetable oils and meals prices are expected to rise sharply in 2021, before stabilizing in 2022 due to supply shortfalls and stronger-than-expected consumption patterns, the World Bank said in its semi-annual commodity markets outlook report.
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The international financial organization in its April 20 report revised its 2021 Oils and Meals Index by nearly 30% from its October outlook and said that global supplies -- the sum of beginning stocks and production -- of the eight major edible oils is expected to grow by 2.9 million mt in 2020-21, down from 3.4 million mt 2019-20.
Crude palm oil (CPO) and soybean oil (SBO) are the world's largest vegetable oil markets, together accounting for more than 60% of global production.
Palm oil, which has a share of 30.2% in the World Bank Oils and Meals index, is expected to have an average price of $975/mt in 2021 in nominal dollar terms.
Adjusted for inflation, palm oil's price is pegged at $969/mt, sharply higher than expectations set by industry watchers in March.
Dorab Mistry, director of Godrej Agrojet, had expected prices to come down to MR 3,300 ($801.75) by June on the benchmark Bursa Malaysia Derivatives exchange at a virtual conference in March, while James Fry, chairman of LMC International, had forecast a price of $925 for CPO in Europe.
Ending stocks in Indonesia and Malaysia -- which account for about 85% of the world's palm oil production -- have seen record lows this year as pandemic-led worker shortages and poor weather in South-East Asia hamper production.
Palm oil plantations, especially in Malaysia, have been hit a by a worker shortage in the past year as pandemic-related lockdowns have prevented foreign workers -- who account for about 70% of its estate workforce -- from returning to the plantations.
However, demand for CPO has stayed strong with largest importer India ramping up buying by 33.5% to 526,463 mt in March compared with February, according to data released by the Solvent Extractors Association of India in April.
Despite reports of a better harvest, the local vegetable oil crops in India have not been able to match demand, an industry analyst told S&P Global Platts.