* Output in 2016 to drop due to El Nino -Mielke
* Yields to recover only in 2018 -Mielke
* Mielke says palm oil undervalued (Adds details of production forecasts)
By Emily Chow
KUALA LUMPUR, Oct 13 (Reuters) - Global palm oil output will grow by 5.5 million tonnes in the new oil year beginning October, leading industry analyst Thomas Mielke forecast on Thursday.
Palm oil output next year is expected to improve after crops took a hit this year from the lingering effects of an El Nino weather event. Last year’s El Nino brought scorching heat across Southeast Asia, hitting palm yields and lowering output.
Global supplies of palm oil will still be tight from now until March, but production will rebound by 5.7 million-6.3 million tonnes in calendar year 2017, Mielke, editor of Hamburg-based newsletter Oil World, said at an industry conference in Kuala Lumpur.
Global output in calendar year 2016 is expected to drop by 3.3 million tonnes to 59.2 million tonnes, Mielke said.
Mielke lowered his 2016 output forecast for top producer Indonesia by 100,000 tonnes to 32.2 million tonnes, and for second-largest producer Malaysia by 300,000 tonnes to 17.8 million tonnes.
He cut his Malaysian output forecast for 2017 by 100,000 tonnes to 20.5 million tonnes, and maintained expectations for Indonesian production next year at 35 million tonnes.
Mielke also said benchmark Malaysian crude palm oil prices are expected to climb to 2,900 ringgit to 3,000 ringgit a tonne in the fourth quarter or in early 2017.
“Palm oil prices are undervalued at the moment,” Mielke said, adding that prices will recover as importing countries start to make more purchases.
Palm oil output, though, will continue to be under pressure due to the lingering effects of El Nino, he said.
“I don’t expect that yields will come back next year ... The real increase in yields is going to be in 2018,” Mielke said.
Lauric oils are set to decline in the next 12 months on account of weak demand and recovering production, he also said.
“Once production starts increasing next year, for palm kernel oil in particular and also coconut oil, stocks will increase because demand is poor,” Mielke said.
“Premiums of lauric oil prices versus palm oil is set to narrow in 2017.”
Reporting by Emily Chow; Editing by Clarence Fernandez and Tom Hogue