World prices for vegetable oils, That have reached multi-year highs in recent months, will decline during the first half of 2022 due to a strong recovery in production and inventories, Oil World analyst Thomas Mielke predicted.
The decline is likely to begin in the next two weeks and gain momentum in 2022, led by sunflower, palm and soybean oil, the head of analytics firm Oil World said in an online seminar.
Reference prices for crude palm oil, the cheapest edible oil, have already soared 37% this year to hit record highs above RM5,000 (US $ 1,202.79) per tonne, as labor shortages production has decreased.
“High prices are not sustainable; the stage is set for a considerable recovery in production and stocks (of global vegetable oils), assuming that the weather conditions are normal, and that the recent decline in palm oil production in Malaysia can be reversed, ”he said.
High prices have encouraged farmers around the world to plant more oilseeds this year, leading to a global production surplus, Mielke said.
“After two years of shortage, the world production of oils and fats will increase by about 8 million tons in the period 2021-2022, which is a maximum of four years,” he said. Most of the expansion will be for palm oil, sunflower oil and soybean oil.
Mielke expects world palm oil production to increase between 3.5 million and 4 million tonnes in the 2021-2022 season, reaching almost 80 million tonnes.
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