| KUALA LUMPUR
KUALA LUMPUR Oct 13 Palm oil output in the
world's top two producers Indonesia and Malaysia will rise next
year and likely surpass the 2015 record, as trees recover from a
crop-damaging El Nino weather pattern, said leading industry
analyst Dorab Mistry on Thursday.
The recovery in palm oil output will lead to a "massive
rebuilding of stocks" in the oil-year ending Sept. 30, 2017, he
"It is too early to forecast Malaysian and Indonesia
production for calendar year 2017 but it is more than likely to
exceed the record production of 2015," Mistry said at an
industry conference in Kuala Lumpur.
The expectations of rising stockpiles could weigh on
benchmark palm oil prices, which are up nearly 7
percent this year on tight supplies after yields were impacted
by the lingering effects of last year's El Nino.
Palm oil climbed to a two-week top of 2,661 ringgit
($640.40) a tonne on Wednesday on forecasts of lower output for
this year due to the El Nino. Palm oil was trading just above
2,620 ringgit per tonne on Thursday afternoon.
Mistry maintained his global outlook for a strong output
recovery of nearly 6.5 million tonnes for the oil-year 2016/17
and calendar year 2017.
However, he adjusted his crude palm oil price target, saying
it would drop to 2,200 ringgit by end-December - instead of in
November as earlier expected - because of recovering production
and rising stocks.
"Most of the additional supply will simply replenish
stocks," said Mistry, who is also the director of Indian
consumer goods company Godrej International. "Currently I do not
expect stocks to become burdensome."
Crude palm kernel oil prices are also expected to decline
from current levels around $700 a tonne higher than crude palm
oil values, to premiums of $200-$250 on slower demand, he said.
Kernel oil prices reached a five-year top of 6,200 ringgit
per tonne in late August, highest since March 2011, on tight
supplies, according to assessment prices by Thomson Reuters
($1 = 4.1550 ringgit)
(Reporting by Emily Chow; Editing by Tom Hogue)