KUALA LUMPUR: Malaysian palm oil futures jumped more than 2% to end Thursday at an all-time closing high, on concerns that an acute labour shortage would persist into early 2022 and hurt output in the world’s second largest producer.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed up 121 ringgit, or 2.4%, at 5,161 ringgit ($1,236.17) a tonne. Palm oil production in Malaysia and Indonesia will only reach 2019 levels by the end of the year, said Julian McGill, Head of Southeast Asia at commodities consultancy LMC International.
The two top producers are set to post no production growth for a third consecutive year, McGill said. Due to the continuous supply constraints, prices are likely to soften slightly over the next six months but remain above 4,700 ringgit ($1,125.75), McGill added.
Sime Darby Plantation Bhd warned labour shortages at palm oil plantations in the country due to coronavirus border closures would worsen in early 2022, compared to the last six months, until workers are allowed to return. For the year, the Malaysian Palm Oil Board expects production to increase 4.9% from last year to 19 million tonnes.
Palm oil exports were forecast to climb 9.3% to 17 million tonnes while stockpile was estimated to grow 23.4% to 1.95 million tonnes. Dalian’s most-active soyoil contract gained 0.5%, while its palm oil contract rose 0.7%. Soyoil prices on the Chicago Board of Trade were down 0.2%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.