Crude palm oil prices may rise to 2,300-2,400 ringgit ($528.37-$551.34) per tonnne in the coming months as Malaysia’s relationship with top importer India improves, industry regulator the Malaysian Palm Oil Board (MPOB) said on Wednesday.
The newly appointed MPOB Chairman Ahmad Jazlan Yaakub said in a statement the rally will come as a relief to industry participants and the tens of thousands of smallholders in the country.
Malaysian benchmark crude palm oil prices have plunged nearly 30% since the start of the year to trade at 2,227 ringgit per tonne on Wednesday after global lockdowns to contain the coronavirus outbreak shuttered restaurants and curbed travel, reducing demand for the edible oil.
Small palm farmers in Malaysia, the world’s second-largest palm oil producer and exporter, are cutting back on expensive fertilisers to cope with low prices amid an economy battered by the pandemic.
Lower fertiliser application will lead to smaller yields of the oil used in everything from noodles to lipstick next year.
However, palm prices are expected to climb after India, the world’s largest edible oil consumer resumed purchases of Malaysian palm oil after a four-month gap following a diplomatic row.
“I hope palm oil prices will continue to rise for the revenue to be used to help palm farmers with their household expenditure while the country faces the COVID-19 pandemic,” Ahmad Jazlan said, referring to the respiratory disease caused by the coronavirus.