Palm Oil Crop Forecast Cut by Oil World After Dry WeatherWhitney McFerron
Global output of palm oil will be smaller than estimated a month ago amid dry weather in top producing countries Indonesia and Malaysia, Oil World said.
World production will be 60.9 million metric tons in the 2014-15 season that started Oct. 1, 200,000 tons smaller than forecast in September while still larger than last year’s output of 58.92 million tons, the Hamburg-based researcher said in an e-mailed report. Production in Indonesia was pegged at 31.9 million tons, up 6.6 percent from the prior season, while Malaysia’s output will drop 1.6 percent to 19.83 million tons.
Malaysia and Indonesia experienced dry conditions in early 2014, as well as in June and July and again in some areas in September, Oil World said. At the same time, demand is rising from countries including India and China, with global imports expected to reach 44.71 million tons in 2014-15, up 5.1 percent from a year earlier, according to the report.
“The growth in world production is likely to slow down,” Oil World said. “Latest indications for September and October point to reduced yields and palm oil output. This must be regarded as the first lagged effect of the unusually dry conditions registered in many oil palm growing areas of Malaysia and Indonesia in January and February 2014.”
Palm oil futures on Bursa Malaysia Derivatives in Kuala Lumpur have declined about 17 percent this year as a record soybean crop in the U.S. increased prospects for ample vegetable oil supplies. Global consumption of eight major vegetable oils at 169.3 million tons may still exceed production of 168.7 million tons, Oil World said.
Soybean oil output was pegged at 47.15 million tons, up from 44.2 million tons in the prior year, amid rising supplies in the U.S., Argentina and Brazil. Sunflower oil production was seen at 15.4 million tons, down 5.6 percent from a year earlier, on reduced supplies from Ukraine and Russia. Global rapeseed oil output was pegged at as much as 26.9 million tons, about 300,000 tons higher than forecast in September and “marginally higher” than the previous year.