| KUALA LUMPUR, Sept 22
KUALA LUMPUR, Sept 22 Global palm oil production
will recover in 2017, increasing by 4 million tonnes in the
first half of next year from the same time in 2016, said leading
industry analyst James Fry, after the crop damaging El Nino
weather event reduced output this year.
Rising palm oil production could dampen benchmark palm oil
prices, which hit a five-month high on tight market
supplies in early trade on Wednesday.
Palm futures rose 0.2 percent to 2,683 ringgit ($653) per
tonne at the midday break on Thursday, up 3.4 percent so far
"The 2017 first half rebound will almost offset the 2016
first half collapse," said Fry, chairman of commodities
consultancy LMC International, in a speech at the industry
conference Globoil India on Thursday.
Fry also forecasts a rise in global palm production in the
second half of 2017 by over 2 million tonnes from the
corresponding period this year.
2016 palm oil production was impacted by the El Nino, a
warming of the Eastern Pacific Ocean waters which brings dry
weather across Southeast Asia and lowers palm yields in top
producers Indonesia and Malaysia.
Fry last forecast in March that global palm oil production
could fall by over 2 million tonnes this year, and saw Southeast
Asian output declining by 4 million tonnes.
For the last quarter of 2016, Fry estimates Malaysian
inventories to climb to a range between 1.75 to 1.80 million
"Crude palm oil output will resume year-on-year growth, but
we have the seasonal slowdown after November," he said.
"Malaysian Palm Oil Board (MPOB) stocks will settle at
1.75-1.80 million tonnes in October-December, and will then fall
back until they soar from Q2 onwards."
Palm oil end-stocks in Malaysia, the world's No. 2 producer
after Indonesia, fell to a near six-year low of 1.46 million
tonnes in August, according to data from industry regulator
Indonesian output may fall by 0.6 million tonnes in the
third quarter this year, but could rise by 0.2 million tonnes
from October to December, Fry said.
Fry also forecast that CPO prices would ease to $650 a tonne
on a free-on-board basis in November and December, and "move up
briefly in January to February" before falling to $550 next
year, based on a Brent crude oil forecast of $45 per barrel.
CPO was trading at $705 a tonne on a free-on-board basis on
($1 = 4.1080 ringgit)
(Editing by Christian Schmollinger)