The production of crude palm oil is expected to return in earnest next year in both Malaysia and Indonesia, OCBC Treasury Research said.
With the Malaysian Palm Oil Board’s (MPOB) palm stocks returning above two million tons in the third quarter of 2022, it means prices are expected to remain supported through the first half of 2022, it said in its Commodity Outlook 2022.
“In addition, our expectations of higher soybean prices mean the palm complex is also expected to be lifted higher,” the research house said.
OCBC has forecast palm oil price at RM4, 750 per ton next year.
For soybeans, the research house said risks remain lifted to the upside.
“In our opinion, China’s demand for soybeans has remained brisk through its power crisis and may yet increase further in 2022 on the back of its recovering hog stock,” it said.
Meanwhile, it said continued economic recovery and constricted supply are likely to continue fueling crude oil higher next year.
It said consumption growth is likely to come from Asia next year, with many Asian countries not having fully reopened their economy post-COVID.
“The increase in oil demand from multiple Asian countries at around the same time, in addition to supply uncertainty from the US and the Organization of Petroleum Exporting Countries and its allies (Opec+), could see Brent test US$100 per barrel for the first time since the shale boom,” the research house said.
For gold, most central banks have now listed taming inflationary pressures as one of their core priorities in 2022, which means the global interest rate environment is likely to tighten sharply on aggregate next year.
“The aggressive pace of rate hikes may outweigh demand for gold as an inflation hedge, resulting in a net bearish effect on gold,” it added.