Fitch Ratings expects crude palm oil (CPO) prices to decline further in 2H21, following a sharp correction in June, mainly driven by higher production due to favourable weather conditions. We also see pressure from substitute oils and the proposed reduction in Indonesian export levies.

Malaysian benchmark CPO spot prices fell in June to around USD850/tonne (t), from around USD1,150/t in May 2021.

However, output in Malaysia remains below normal due to a shortage of foreign workers as a result of Covid-19-related restrictions. We expect the government to take measures to improve labour availability for oil palm estates, but slow progress could crimp CPO output, supporting prices.
Source: Fitch Ratings