Production of crude palm oil (CPO) in Indonesia is estimated to rise to 33 million tons in 2016, roughly 500,000 tons lower than the initial forecast as the El Nino weather phenomenon is expected to impact on agricultural output by causing an extended dry season in Southeast Asia (that will perhaps last beyond December). This year, Indonesia, the global leading CPO producer and exporter, is expected to produce 31.5 million tons. Reduced output in Indonesia may support palm oil prices.
Derom Bangun, Chairman of the Indonesian Palm Oil Board (an umbrella organization of the major Indonesian palm oil associations), said the country's CPO output will rise to 33 million tons in 2016 as new trees, planted in the years 2010-2011, will boost production figures. However, the El Nino phenomenon will limit production growth.
Over the past two months palm oil prices have rebounded to around 2,300 ringgit (approx. USD $543) per ton on concern about drought impacting on palm oil producing regions. However, with record inventory levels, near-record production figures, low global demand, and high stockpiles of soybeans, a further rising price is difficult.
As a result of the news shares of PP London Sumatra Indonesia rose 9.56 percent, Astra Agro Lestari climbed 5.84 percent, Sampoerna Agro were up 2.28 percent, and Gozco Plantations rose 2.17 percent on Wednesday (21/10).
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