KUALA LUMPUR (June 28): Fitch Ratings expects higher global vegetable oil output to drive a decline in crude palm oil (CPO) prices to below US$1,000 (about RM4,399) a tonne (t) in the second half of 2022 (2H22) after averaging at around US$1,500/t in 1H22.

In a statement on Tuesday (June 28), the rating agency said CPO prices had dropped by over US$300/t since early June following a policy shift in Indonesia to encourage exports by reducing export levies.

“We expect continued output growth in Indonesia to exert further pressure on prices.

“A reinstatement of export curbs by Indonesia to ensure adequate domestic supply and lower supply of substitute sunflower seed oil from Ukraine are key upside risks to CPO prices,” it said.

Meanwhile, Fitch said Malaysia’s plans to bring in 32,000 foreign workers as approved in September 2021 continue to face delays.

“We believe labour shortages will continue for up to another six months.

“However, the situation should be resolved by early 2023 unless there is another major Covid-19 outbreak and border restrictions are reimposed,’ it said.