Fitch Ratings foresees Malaysian benchmark crude palm oil (CPO) spot prices will average 850 U.S. dollars per tonne in 2023, significantly lower than 1,175 dollars per tonne in 2022, Trend reports citing Xinhua.

The rating agency said in a note on Wednesday that palm oil benchmark prices have rebounded to above 850 dollars per tonne in the fourth quarter of 2022, from the end-September level of around 700 dollars per tonne.

“We expect prices to strengthen further in the first half of 2023 to above the 900 dollars per tonne level,” Fitch said.

According to the agency, the outlook for palm oil demand growth has been boosted by Indonesia’s decision in December 2022 to increase the share of palm-oil-based fuel in diesel.

However, Fitch expects supply to increase from the second quarter of 2023, and cause prices to drop in the second half.

“Foreign worker availability in Malaysia is gradually improving, and we expect the situation to normalize by mid-2023,” it said.

It also expects healthy soil moisture conditions and lower flooding-related disruptions to support output.

Source: TREND News Agency