‘Global sup­ply to re­main tight in near term’

New Straits Times - - Business / News - Amir Hisyam Rasid

KUALA LUMPUR: Firmer global de­mand for palm oil will cause fur­ther sup­ply short­age de­spite higher pro­duc­tion outlook among ma­jor ex­porters, in­clud­ing Malaysia and In­done­sia, said in­dus­try ex­perts.

Ex­perts at the Palm and Lau­ric Oils Con­fer­ence and Ex­hi­bi­tion 2017 also expect global palm oil out­put to in­crease by six mil­lion tonnes and yield to re­cover this year.

Oil World ex­ec­u­tive di­rec­tor Thomas Mielke said yes­ter­day the global sup­ply of oils and fats would re­main tight this month and June de­spite an ex­pected re­cov­ery of palm oil pro­duc­tion growth this year.

He said lower palm oil stocks would re­sult in fur­ther de­cline of world sup­plies by 2.2 mil­lion to 2.3 mil­lion tonnes from Jan­uary to this month.

“This is de­spite that pro­duc­tion growth is re­cov­er­ing. We will see a very big in­crease in world pro­duc­tion of veg­etable oils by 10 mil­lion to 11 mil­lion tonnes this year, of which palm oil is likely to in­crease by 5.9 mil­lion tonnes.”

He said with the set­back in world pro­duc­tion, palm oil is los­ing mar­ket share and de­clin­ing in ex­ports due to fierce com­pe­ti­tion from soy­abean and other veg­etable oils.

“Palm oil has be­come by far the most im­por­tant veg­etable oil for con­sumers in many coun­tries, pri­mar­ily in Asia, Africa and South Amer­ica, but the sup­ply short­age made it nec­es­sary to ra­tion de­mand. De­mand is ex­pected to peak ahead of 2019 and 2020.

“Soy­abean oil pro­duc­tion has been sub­stan­tially in­creas­ing in the United States and South Amer­ica. The same goes for rape­seed and sun­flower seed oils. Due to sup­ply short­age, palm oil is lag­ging be­hind.”

LMC In­ter­na­tional Ltd chair­man James Fry said global palm oil pro­duc­tion this year would grow by more than six mil­lion tonnes but lower than lev­els seen in 2015.

“As out­put gains pace, Malaysian Palm Oil Board (MPOB) stocks will move above two mil­lion tonnes by July and above 2.5 mil­lion tonnes from Oc­to­ber to De­cem­ber.

“Look­ing ahead, the strong in­crease that will oc­cur in MPOB stocks later this year will drag the Euro­pean Union crude palm oil pre­mium over Brent prices back to mid-2015 lev­els.”

MIDF Re­search plan­ta­tion an­a­lyst Alan Lim ex­pects Gent­ing Plan­ta­tion Bhd, IJM Plan­ta­tion Bhd and TSH Re­sources Bhd to ben­e­fit dur­ing the yield re­cov­ery pe­riod this year due to the young age pro­file of their oil palms.

“Planters with young age pro­file will reg­is­ter bet­ter fresh fruit bunches growth this year,” he said.

PIC BY MUHD ZAABA ZAKERIA

Oil World ex­ec­u­tive di­rec­tor Thomas Mielke says there will be a big in­crease in world pro­duc­tion of veg­etable oils by 10 mil­lion to 11 mil­lion tonnes this year.

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