DUBAI: Malaysia's palm oil output is forecast to rise to 20 million tonnes in 2019, up from as much as 19.5 million tonnes forecast earlier, industry analyst Dorab Mistry said on Monday, though production gains would be capped by aging trees.
Malaysian palm oil output levels for January, February and March have set monthly records, according to Refinitiv Eikon records going back to January 2000.
Mistry raised his Malaysian output forecast based on this so-called high-cycle of production that has lasted from about August 2018 until March. After this burst of cultivation, the trees will need to rest, limiting production in the rest of 2019.
"Malaysia will be hurt more by production problems in 2019 due to the older age of its plantations," Mistry said, according to a copy of his speech at a conference in Dubai reviewed by Reuters.
"Older trees are suffering from stress due to high productivity in 2018," said Mistry, adding that low prices had also caused small growers to cut fertilizer usage from last August.
Benchmark palm oil prices on the Bursa Malaysia Derivatives Exchange have traded in a range this year roughly between 2,300 ringgit and 2,000 ringgit per tonne. The most-active contract closed on Monday down 0.4 percent at 2,109 ringgit ($510.41).
Mistry maintained his forecasts for Indonesian output at 44 million tonnes in 2019, and that global palm oil production would rise by less than 3 million tonnes this year.
He also kept estimates that combined palm oil inventories in Indonesia and Malaysia, the world's two biggest palm cultivators, will decline to 6 million tonnes "soon" due to biodiesel mandates for transportation fuels in the Southeast Asian nations.
"Thanks to the B20 biodiesel mandate and its strong implementation in Indonesia, stocks there are comfortable," said Mistry, adding that Malaysian stocks should fall from April to June before recovering.
The Indonesia Palm Oil Association said palm oil production was 43 million tonnes for 2018, while the Malaysian Palm Oil Board reported last year's output at 19.5 million tonnes.
In terms of demand, Mistry revised his forecasts for India's edible oil imports for the 2018/19 marketing year that started on Nov. 1 to 15.5 million tonnes. This is slightly down from a January outlook of 15.7 million tonnes and versus imports of 15 million tonnes the previous year.
"Indian imports 2018/2019 will be higher by 500,000 tonnes. (The) main increase will be palm," he said.
($1 = 4.1320 ringgit) - Reuters
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