‘11PC SPIKE IN GLOBAL CPO OUTPUT’
Near-perfect weather will help boost yield to 65m tonnes this year, say experts
GLOBAL palm oil production is expected to climb 11 per cent to 65 million tonnes this year as the near-perfect weather boosts yields.
This was among the key takeaways for the 2,000 edible oil players from 59 countries who are participating in the two-day global annual Palm and Lauric Oils Price Outlook Conference & Exhibition (POC2017), which will also set the sector’s direction this year.
IJM Plantations Bhd senior independent director M.R. Chandran said Indonesia might produce 34.8 million tonnes of the commodity this year, up from 31.8 million tonnes last year.
Malaysia, the world’s second largest producer, would likely produce 20 million tonnes this year, up from 17.3 million tonnes last year.
“There have been ample rain to boost productivity in Malaysia and Indonesia,” Chandran was quoted by Bernama as saying.
However, industry observers said rising production and slowing demand from top importers were expected to keep a lid on crude palm oil (CPO) prices.
The CPO was expected to trade between RM2,500 and RM3,000 per tonne this year, said Chandran, adding that the commodity was also tracking the ringgit’s movement against the US dollar.
Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said expected average prices to hover between RM2,700 and RM2,800 per tonne this year, with local exports hitting RM70 billion.
“This is based on anticipation of higher prices, driven by various government efforts and initiatives, including venturing into other markets, especially India and Iran,” said Mah after officiating at the conference, which is organised by Bursa Malaysia.
Bursa chief executive officer Datuk Seri Tajuddin Atan said the local bourse’s crude palm oil futures (FCPO) contract has become a globally hedging tool, accessible and tradeable on CME Globex, an electronic trading system that provides the broadest array of futures and asset classes.
Traded contracts for Bursa’s FCPO rose fivefolds to 11.4 million last year, from 2.2 million in 2006.
In addition, FCPO contracts traded annually surpassed 2015’s record level of 10.9 million contracts, a rise of 4.58 per cent.
Tajuddin said Bursa would continue to develop a sustainable marketplace by improving its eco-system and enhancing contracts features to support the dynamic needs of the industry.
“The continuous effort will ensure we have a robust capital market to support growth of the palm oil industry and the nation’s economic aspirations,” he added.
Tajuddin said Malaysia’s inherent “seed-to-port” infrastructure enabled Bursa’s FCPO contract to be positioned as the global price benchmark for crude palm oil market.
“We will continue to work closely with the Plantation Industries and Commodities Ministry and the Malaysian Palm Oil Board to promote more listings of plantation-based companies on Bursa.
“With positive expectations for the Malaysia palm oil sector this year, the exchange will continue to develop a sustainable marketplace to support the dynamic needs of the industry,” he added.