Palm oil prices look set to drop by 30%, The Edge Markets quoted industry expert and Godrej International director Dorab Mistry as saying.

Mistry forecast a price drop to RM2,500/tonne (US$543) by the end of the year as production recovers and demand falters due to high prices, according to the 23 September report.

This would represent a slump of about 30% from current levels and was a huge drop from a closing record of more than RM7,000/tonne (US$1,520) in April, the report said.

“The major markets for palm are in the developing countries, which have big problems,” Mistry was quoted as saying in slides prepared for the Globoil India conference from 21-23 September.

Major economies could also go into a recession, he was also reported as saying.

The palm oil sector had been disrupted by Indonesia’s changing export policy, The Edge Markets wrote, with prices rising following the country’s ban on exports of the commodity in April in a bid to curb local food costs.

However, the move had little impact on domestic prices and caused stockpiles to overflow, prompting the country to reverse the policy and increase shipments.

In May, Mistry had correctly forecast that palm oil could drop to RM5,000 (US$1,086)/tonne by June and said he expected prices to reach RM3,000/tonne by September, the report said.

Benchmark futures in Kuala Lumpur traded at about RM3,755 (US$815) /tonne on the day of the report, The Edge Markets wrote.

“I am on record saying that BMD futures will fall to RM3,000 (US$651) by the end of September and will further fall to RM2,500 (US$543) by the end of December 2022,” Mistry was quoted as saying.

Mistry repeated his call for Indonesia to remove all export taxes and levies until the end of the year to accelerate shipments and bring stockpiles back to normal levels, the report said.

In addition, he called on the government to abolish the Domestic Market Obligation (DMO) policy, which requires palm oil exporters to sell a portion of their palm oil to the domestic market before they can receive a permit to export.