Palm oil demand in India is not forecast to recover until the first quarter of 2021 while palm oil prices are expected to remain low until the end of the current calendar year, AgriCensus quoted Godrej International director Dorab Mistry as saying on 26 June.

The rebound in India’s purchases in May and June would drop off soon, according to Mistry, as the recovery was largely due to filling pipeline stocks which had slumped to near-record lows as a result of the COVID-19 lockdown.

By the end of 2020, Indian palm oil demand will be between 85-90% of the pre-COVID levels. 100% will be only reached in the first or even second quarter of 2021,” AgriCensus reported Mistry as saying at a webinar organised by the Indian Solvent Extractors’ Association (SEA).

Meanwhile, the industry expert said that the current recovery in commodity prices was partially due to the huge economic boost that had been delivered in almost every country.

“After the middle of July, we will see once again recessionary tendencies, economic shrinkage and a very tough environment for commodities and for the world economy,” Mistry was quoted as saying.

Commodities were in a for a tough time with ‘cruel prices’ forecast, according to Mistry, which meant that palm oil price levels were expected to fall very close to the cost of production, which he put at MYR1,500-1,800/tonne (US$350-$420/tonne) based on Malaysian origin.

Palm oil prices would remain under pressure until the fourth quarter of 2020 to support demand, he was quoted as saying, with the outlook still ‘fragile’ amid growing signs of further economic contraction due to the risk of a second wave of the COVID-19 pandemic.

“If we push up prices unnecessarily, we are going to destroy demand and we are going to create problems in October, November and December,” he added.

“I am looking forward to high commodity prices from the second quarter of 2021, but until then… I am afraid we have to live with low prices.”