KUALA LUMPUR, Sept 18 (NNN-BERNAMA) – Fitch Solutions Macro Research today (Wednesday), forecast China’s and India’s import demand to remain strong over the coming months, which will continue to support global palm oil prices.
The research house said that, it maintained its forecast for palm oil price to average 2,150 ringgit (about 514 U.S. dollars) per tonne this year, which was slightly lower than 2,300 ringgit per tonne in 2018, as it believed palm oil price would remain supported around current levels over the remainder of 2019.
“In line with our view, prices recovered from the lows they reached in the second quarter, as demand was strong over recent months, in particular, import demand from India and China,” it said.
According to the research house, the protracted global trade tensions has led to a strong pick up in palm oil import demand in China this year, as soybean imports from the United States have remained very low.
Looking at 2020, Fitch Solutions also maintained its view that, palm oil would average slightly higher at 2,300 ringgit per tonne, as global production growth would slow down and consumption would continue to grow robustly, mainly driven by Indonesia and Malaysia’s resolute bio-diesel development policy.
As for palm oil production, it noted that both countries recorded several episodes of dry weather in 2019, potentially due to El Nino, which was likely to dent production growth in the coming quarters.
The research house projected their output to rise by 4.2 percent this year, and by 3.2 percent next year, compared with 7.9 percent growth in 2018.
In the longer term, it projected the growth in global palm oil production to slow and to expand by only 3.6 percent annually on average, from 2020 to 2023, as compared with the average annual growth rate of 4.7 percent over 2014 to 2018.
Meanwhile, it anticipated the outlook for global palm oil consumption continues to improve and would grow at a stronger 7.1 percent in 2019 and 5.1 percent in 2020, compared with the five-year average growth of 2.9 percent.
The research house revised up its Chinese palm oil consumption forecast significantly, projecting the consumption to rise 20 percent year-on-year to 6.18 million tonnes in 2019, and further five percent to 6.49 million tonnes in 2020.– NNN-BERNAMA