Like many other commodities, palm oil experienced high prices throughout 2021.

Pricing had more than doubled, over the past 18 months, to a record high of US$1,213.85 a tonne in October 2021. In November and December, however, prices dipped and weighed on 2021's average pricing to US$1,000 per tonne.

The high prices can be arguably attributed to lower palm oil output. For the most of 2020 and throughout 2021, Malaysia's Covid-19 pandemic-led border closures had starved the country's oil palm estates of many foreign workers who had gone back to their home countries and could not enter Malaysia. The CPOPC also sees structural changes in the global palm oil supply due to a slowdown in new plantings throughout Indonesia and Malaysia since 2015. With the ageing palm tree profile across both countries, the replanting programme will also temporarily limit palm oil supply in the short to medium term. As agricultural land becomes limited, oil palm replanting is key to boosting palm oil yield across Indonesia and Malaysia. It is important to replant to sustain supply because Indonesia and Malaysia produce about 85% of the world's palm oil needs.

On the other side of the globe, severe drought at Canada's farmlands in 2021 resulted in its smallest rapeseed harvest in 13 years. The lower-than-expected supply of soft oils, had induced the sharp rise in other vegetable oil prices to a 10-year high, which then had a spill-over effect onto palm oil pricing. The limited vegetable oils supply, all over the world, is likely to continue into the first half of 2022. In view of the Covid-19 pandemic that restricted border crossings, analysts predict the easing of labour shortage would only materialise in the first quarter of 2022, and palm oil output recovery after June 2022. LMC International highlighted the global palm oil supply will only see minimal growth in the 2019-2022 period due to year-end floods and labour shortage in Malaysia.