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UPDATE 1-Palm oil prices seen recovering as output takes hit -Mielke
March 9, 2016 / 5:42 AM / 2 years ago

UPDATE 1-Palm oil prices seen recovering as output takes hit -Mielke

* Sees 2015/16 global palm oil production declining by 200,000 T

* Says prices have “a lot of upward potential” (Adds comment, detail)

By Naveen Thukral and Emily Chow

KUALA LUMPUR, March 9 (Reuters) - Palm oil prices are expected to recover to trade around 2,700-3,000 ringgit a tonne by June as dry conditions from the El Nino weather pattern crimp global output, leading edible oil industry analyst Thomas Mielke said on Wednesday.

Benchmark Bursa Malaysia palm oil futures have fallen about 0.8 percent in March compared with a gain of 4.3 percent last month. The market hit a two-year high of 2,648 ringgit ($641) a tonne in February.

“We expect prices will recover ... my expectation is palm oil futures are likely to recover to 2,700-3,000 ringgit until June, there’s a lot of upward potential,” said Mielke, editor of Hamburg-based newsletter Oil World.

Palm oil prices have suffered in the last four weeks due to slowing demand but the market is expected to rise as production declines, Mielke said at an industry conference in Kuala Lumpur. They stood around 2,550 ringgit on Wednesday.

“Many consumers delayed purchases because they could reduce available stocks which were relatively high at the end of December. Purchases were postponed. There was a slowdown in world trade in Jan-Feb,” Mielke said.

Global palm oil production is expected to drop by 200,000 tonnes in 2015/16 due to the dry weather as compared with average annual growth of 3 million tonnes, he said.

The current El Nino, a warming of sea-surface temperatures in the Pacific that typically leads to scorching weather across Asia has been easing. But it has already hit palm plantations in Southeast Asia, where Indonesia and Malaysia account for 90 percent of the world’s palm oil output. ($1 = 4.1300 ringgit) (Reporting by Naveen Thukral and Emily Chow; Editing by Joseph Radford)

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