Global palm oil output likely to rise by 6 million tonnes

Global palm oil output likely to rise by 6 million tonnes

KUALA LUMPUR: Global palm oil output is expected to increase by six million tonnes in 2017 as oil palm trees were recovering from the adverse effects of the El Nino, says a leading industry analyst Thomas Mielke.

He said the current good weather, particularly in Malaysia and Indonesia, the world’s top two producers was also aiding output.

In 2016, palm oil production was impacted by the El Nino, a warming of the Eastern Pacific Ocean waters which brings dry weather across Southeast Asia and lowers palm yields in top producers Indonesia and Malaysia.

Indonesia’s palm oil output was expected to reach 35 million tonnes in 2017 year from 32.10 million tonnes recorded in 2016 while Malaysia’s output would increase to 19.85 million tonnes from 17.32 million tonnes previously.

In October 2016, Mielke estimated that global palm oil output grew by 5.5 million tonnes.

“Replenishment of vegetable oil stocks will take time and will not be possible in 2016/2017 as we need a better year of good weather and high production,” he said at the Palm and Lauric Oils Price Outlook Conference and Exhibition in Kuala Lumpur on Wednesday.

On palm oil prices, Mielke, who is also editor of the Hamburg-based Oil World newsletter said the price setback should be moderate as long as palm oil stocks remained small.

He said price peaked to RM3,300 per tonne in the first quarter of this year, but would stay below soybean oil prices in coming weeks and for the rest of the year.

“Some recovery is likely to be seen in the next three to six weeks because of the prospects of strong demand, globally. With more purchases from consumers, prices would rise sizably,” he said.

Meanwhile, Mielke was of the opinion that global vegetable oil imports had increased to meet current demand.

For 2017, he forecast that yield would recover but remain below average level. – Bernama

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