KUALA LUMPUR: Palm oil registered its best year since 2019, with prices more than doubling in three years, as a chronic labour shortage in second-biggest grower Malaysia and tight global vegetable oil supplies drive up futures.

       The tropical oil, used in everything from cooking oil to chocolate and soap, surged 31% this year as planters in Malaysia grapple with their worst-ever shortage of plantation workers after the pandemic shuttered borders and the government froze new recruitment of foreign labourers.

       Prices climbed to a record closing high of RM5,071 (US$1,214) a tonne in October.

       “2021 has been a year of supply shortage in the palm and edible oils market,” said Sathia Varqa, owner of Palm Oil Analytics in Singapore.

       Malaysia has been the worst-affected due to the labour crunch, while adverse weather conditions in Canada and Ukraine hit canola and sunflower seed output, he said.

       Palm oil futures for March climbed 0.5% to close at RM4,705 a tonne yesterday, their second quarterly gain.

       Palm’s closest rival soybean oil is up 34% this year in Chicago, while Canadian canola has soared 60%.

       While depressed production and anticipation that year-end palm oil stockpiles will stay below two million tonnes in Malaysia are bullish for prices, they are widely priced in and the market will now be watching December production and exports, Varqa said.

       “The market is waiting for surprises,” he said. “Indication for December production will be critical for how palm oil prices will move next week.” — Bloomberg