Palm oil futures prices hit their highest level in the past 10 years, and they may rise further.

　　Earlier this month, the benchmark contract price of palm oil futures on the Malaysian Derivatives Exchange (BMD) hit US$961 per ton, the highest level since August 2011.

　　84% of the world's palm oil is produced in Malaysia and Indonesia. In these two places, the new crown epidemic has caused labor shortages, which in turn led to a sharp drop in palm oil production. At the same time, the demand for palm oil in cooking and manufacturing in China and India continues to increase. Malaysia’s palm oil inventories have been at their lowest levels in years.

　　Since the second half of 2020, the number of confirmed cases of COVID-19 in Malaysia and Indonesia has continued to rise. In the past month, there were 260,000 new confirmed cases of COVID-19 in Indonesia, with a total of 940,000 confirmed cases; and nearly 80,000 new confirmed cases in Malaysia, reaching a total of 169,000.

　　On January 11, Malaysia implemented the latest blockade policy and extended the blockade policy for severely affected areas for another two weeks. Many workers in Malaysia are from neighboring countries and Indonesia, which has a relatively large population. With the tightening of border policies during the epidemic, it is difficult for foreign labor to enter Malaysia, and many industries including palm oil are in labor shortage. Aurelia Britsch, head of commodity analysis at Fitch Solutions, said that Malaysia’s latest blockade policy may further exacerbate production problems and pose challenges to the port transportation of oil.

　　In the crop year ending September 30, 2020, total global palm oil consumption was 71.9 million metric tons, slightly lower than the 72.5 million metric tons in the previous year. The U.S. Department of Agriculture predicts that global palm oil consumption this year will be 75 million metric tons.

　　According to Chinese customs data, since the summer of 2020, China's imports of palm oil have increased, and palm oil imports from August to December have increased by 9% year-on-year. Dorab Mistry, head of vegetable oil trading at Indian consumer goods company Godrej International, pointed out in a recent report that Chinese consumers’ cooking habits are changing, with increased preference for vegetable oils and weaker preference for animal oils, which is stimulating China’s palm oil imports. A key reason.

　　Analysts generally predict that in the coming months, as labor costs rise, palm oil spot and futures prices will continue to rise.

Information source: China Detergent Industry Information Network