CPO price to average at RM2,500 in Q3

KUALA LUMPUR: Malaysias crude palm oil (CPO) price is expected to average RM2,500 per tonne during the third quarter of 2017 before falling to RM2,250 in the fourth quarter.

LMC International Chairman of Commodities Consultancy, James Fry, said in free on board terms, the forecast pegged an average price of US$605 (US$1 = RM4.45) in the third quarter and US$550 in the fourth quarter.

“Malaysia’s production is expected to increase to 19.9 million tonnes this year, from 17.3 million last year as it recovers from the El-Nino weather pattern in 2016,” he said at the Palm and Lauric Oils Price Outlook Conference and Exhibition here today.

The El Nino weather pattern brought scorching heat across South-East Asia, lowered palm fruit yields in Indonesia and Malaysia, producers of about 90% of the global palm oil.

“CPO output will soar this year. If we go by 1999 as a valid guide,  Malaysian output will grow by five million tonnes, which is a conservative figure,” he said, referring to the production rebound after a severe El Nino weather pattern in 1998.

He said that as output increased, Malaysian Palm Oil Board stocks would move above two million tonnes by July and above 2.5 million tonnes from October to December.

“This is based on the strong recovery that occurred in the year-on-year growth in Malaysian crude palm oil production after the end of El-Nino in 1997/1998,” said Fry.

A similar recovery in monthly output was visible for Indonesia and Sabah and Sarawak, though Sabah would still be lagging behind due to its repeated droughts, Fry pointed out.

He estimated global CPO production to increase to over six million tonnes. - Bernama