Palm Oil Production Likely To Fall, Says Analyst

BANGI (Selangor, Malaysia), April 14 (Bernama) -- Palm oil production is likely to fall due to drought, lower yields from maturing trees and a shortage of labour, said edible oil analyst, Thomas Mielke. He said the global palm oil output for September and October this year was expected to drop to 700,000 tonnes against 2.1 million tonnes in 2015. "This year, we expect production to drop by one million tonnes or more due to El Nino. "Yields in Indonesia and Malaysia have been low and would not change significantly soon following maturing trees and shortage of labour," he said at a Malaysian Palm Oil Board seminar here Thursday. Mielke, who is also Executive Director of Oil World, said Indonesia saw rising matured areas to 600,000 hectares and in Malaysia, with foreign labour not allowed to come in during harvesting season, this would be a risk as the crops would rot. "Palm oil production in key countries like Indonesia might decrease by 400,000 tonnes this year to 33 million tonnes compared to last year and Malaysia will only produce about 19.2 million tonnes versus 20 million previously," he said Meanwhile, Mielke said, the demand for oils and fats for September and October this year was expected to accelerate to 5.2 million tonnes driven by the recovery in biodiesel in Indonesia and strong food demand in India. "With production deficit and declining stocks, prices of edible oils and fats are expected to appreciate. "Malaysian palm oil prices are expected to recover to US$720 (RM2,800) to US$772 (RM3,000) in the next one or two months but may appreciate beyond that depending on what happens on the production side," he said. (US$1 = RM3.88) He said the trend might continue in 2017 when the lagged effect of drought from 2015 would be seen on palm trees. -- BERNAMA