KUALA LUMPUR: Global palm oil production is forecast to increase by 6 million tonnes in 2017, says leading vegetable oils analyst Thomas Mielke.
Last October, Mielke had estimated global palm oil output for 2016/2017 to grow by 5.5 million tonnes.
He expects Malaysian palm oil output to increase to 19.85 million tonnes this year from 17.32 million tonnes, a year ago, while production of Indonesian palm oil will rise to 35 million tonnes in 2017 from 32.10 million tonnes last year.
“Palm oil prices have peaked, but the decline in the past four weeks was overdone.
“Some recovery is likely in the next three to six weeks because of insufficient supplies and a prospective strong world import demand,” he said when presenting his paper on World Supply, Demand and Price Outlook of Vegetables Oils at the 28th Global Palm and Lauric Oils Conference yesterday.
He expects yields to recover, but remain below average, adding that last year, the average annual oil yield fell to a 19-year-low.
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.
However, palm oil would stay below soy bean oil in coming weeks and also for the rest of the year.
Last year, Mielke said that the benchmark Malaysian crude palm oil prices were expected to climb to RM2,900 to RM3,000 per tonne in the fourth quarter of 2016 or in early 2017.
He, however, did not disclose his CPO price projection for this year.
In the meantime, he said world imports of vegetable oils have to increase by at least 3.3 million tonnes to 3.6 million tonnes in January/September 2017, to ensure sustainable supplies to meet the current demand.
Palm oil production took a hit last year on strong effects of the El Nino weather in 2015, resulting in lower fresh fruit bunch yields.