Malaysia, Indonesia To Experience Below Normal CPO Output

KUALA LUMPUR, Oct 12 (Bernama) -- Top crude palm oil producers, Malaysia and Indonesia, will experience below normal crude palm oil (CPO) production until the second quarter of 2017 as a result of the lingering effects of the El Nino phenomenon. Gan Ling Sdn Bhd Director Ling Ah Hong said continuing tight supply would limit any anticipated rise in inventories and support upward movement of prices. "El Nino is not over yet and there will be another round of supply disruption," he said in his presentation titled, 'El Nino-La Nina Sequel And Palm Oil Market - Continuing Catalyst For Price Recovery" at the two-day Malaysia Palm Oil Trade Fair and Seminar held here Wednesday. The strong El Nino coupled with a sharp decline in output triggered a strong recovery in prices in the third quarter of 2016 in Malaysia and Indonesia. However, Ling said CPO prices may retreat between US$1,002 (RM2,400) per tonne and RM2,700 per tonne in the fourth quarter of 2016 in the absence of fresh catalysts. He pointed out that the extent of a recovery in CPO prices would depend on the possible emergence of the La Nina which would impact soybean production in North and South America late this year and in 2017. "The La Nina is also expected to assist with yield recovery. "Assuming annual production reaches 17.8 million tonnes this year, we will recover to 2015's output level of 20 million tonnes by end-2017," he added. Indonesia's production level is likely to recover to 33 million tonnes in 2017 from 29 million in 2016. (US$1 = RM4.19) -- BERNAMA