Prices for palm kernel oil will increase in July

Market analysts forecast a rise in palm kernel oil prices in the coming months, citing several factors affecting the dynamics of supply and demand for the commodity, according to the analytical center ChemAnalyst. These include difficult sowing conditions in key producing countries, including Malaysia, Indonesia and Thailand. Industry experts also point to a combination of weather conditions, labor shortages and global economic factors as the main drivers of the expected price spike.

One of the main concerns is the impact of unpredictable weather conditions on palm plantations. Malaysia, the second largest producer of palm oil and palm kernel oil in the world, has experienced unusually dry conditions in several key growing regions. This prolonged period of drought has impacted palm fruit yields and is expected to reduce oil recovery. Similarly, some parts of Indonesia, the world’s largest producer, experienced excessive rainfall, leading to flooding in some plantation areas and making harvesting more difficult, this is likely to affect sentiment in the global oil market, including palm kernel oil.

Moreover, labor shortage remains a major challenge for the industry, especially in Malaysia. The country has long relied on foreign workers to work on plantations, but pandemic travel restrictions and changes in labor policies, have led to significant labor shortages. This shortage affects harvesting efficiency and overall oil production.

Global economic factors also play a role in the expected increase in palm kernel oil prices. The gradual reopening of economies across the globe has led to an increase in demand for palm kernel oil across various industries including food, cosmetics, and biofuels. This surge in demand coupled with supply constraints is expected to put pressure on prices.

In addition, rising cost of fertilizers and other agricultural inputs is also contributing to higher production cost, which is likely to affect the market price. According to market experts, in recent times, amid trade disputes affecting overall logistics operations, limited availability of fertilizers and adverse weather conditions, producers are facing significantly higher operating costs and this will inevitably affect the final price of the product. Consumers and businesses that rely heavily on palm kernel oil supplies may have to prepare for higher palm kernel oil costs in the short term. However, experts emphasize that the long-term outlook for palm oil remains positive, given its importance to global food security and versatility in a variety of applications.

Palm oil prices are likely to continue rising in the second half of the year as the onset of La Niña threatens the already tight supply of the world’s most consumed vegetable oil, The Edge Malaysia previously reported.

Tags: prices, palm oil