Recent palm oil price decline likely to continue, says Fitch

Crude palm oil (CPO) prices are expected to decline further in 2H21, following a sharp correction in June, mainly driven by higher production due to favourable weather conditions, Fitch Ratings said in a report.

“We also see pressure from substitute oils and the proposed reduction in Indonesian export levies,” Fitch said.

Malaysian benchmark CPO spot prices fell in June to around USD850/tonne (t), from around USD1,150/t in May 2021.

However, output in Malaysia remains below normal due to a shortage of foreign workers as a result of Covid-19-related restrictions, Fitch said, adding that it expects the government to take measures to improve labour availability for oil palm estates, but slow progress could crimp CPO output, supporting prices.

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