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In 2022 Palm Oil will likely Bull to Roar on Labor Crunch and Omicron fear

 Grower Malaysia and heavier rains than usual in key growing areas disrupt production of the world’s most-consumed edible oil  Similarly Palm Oil early 2022 as a chronic worker shortage could keep prices elevated after a record year in 2021 when benchmark futures rocketed to an all-time closing high of 5,071 ringgit ($1,213) a ton In Nov 13,2021.

Although Malaysia is trying to expedite the arrival of much-needed foreign workers for its plantations, the spread of omicron may scupper those plans, constrain harvesting and keep supplies tight. The production shortfall in Malaysia, which pushed palm to the forefront of the rally in global edible oils this year, could linger into early 2022, as planters may not receive new workers before mid-year.

In the first quarter, there may be attempts to reach new highs around 5,200 ringgit and beyond, as supply tightness persists at a time of low seasonal production and festive demand for Lunar New Year, said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental in Mumbai. “But in subsequent quarters, prices will be pressured by good supplies and could decline to 3,975 ringgit or even lower.”

According to Dr. Sathiya varqa“If promises are kept, we should see boots on the ground in May-June,” which would push up production significantly. Output may climb 6% to 19.2 million tons next year if workers return,”

In top grower Indonesia, production patterns will likely return to normal next year, with first quarter yields the lowest, according to Togar Sitanggang, vice chairman of the Indonesian Palm Oil Association known as Gapki. He forecasts an increase of around 3% in full-year output to 48 million tons.

The Situation In Malaysia, continuous rain submerged several parts of Pahang and Selangor this month, disrupting harvesting and logistics on palm oil estates, and shutting operations at Port Klang, Southeast Asia’s second-biggest port for several days. The Malaysian meteorological department is forecasting a monsoon surge, which could trigger more rain through Jan.

On the Other HandPalm oil’s cost of production based on current fertilizer prices is estimated to be 15%-20% higher in 2022 from a year ago,” said UOB Kay Hian director of Asean Plantation Research Leow Huey Chuen. “High crude palm oil prices may compensate the high cost, but getting fertilizers delivered on time is another challenge.”

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