Asian palm oil producers forecast lower output in 2020

FILE PHOTO: A palm oil seed is seen at a plantation in Pulau Carey, Malaysia, January 31, 2020. REUTERS/Lim Huey Teng/File Photo

KUALA LUMPUR (Reuters) - Total palm oil output in top producers Indonesia and Malaysia is expected to fall in 2020 hampered by a labour shortage, and last year’s dry weather and lower fertiliser application, the Council of Palm Oil Producing Countries (CPOPC) said.

The prospect of a La Nina weather patter bringing wetter-than-normal weather to Indonesia and Malaysia could also adversely affect crop production and harvesting, it said.

“The potential of La Nina in the second half of the year will dampen any prospects of increased production,” CPOPC, a palm oil board led by Indonesia and Malaysia, said in a report released on Wednesday.

CPOPC forecast Indonesia’s crude palm oil production this year would be 1-2 million tonnes below last year’s 44 million tonnes.

Output in neighbouring Malaysia is expected to drop 4.3% to 19 million tonnes.

“The relentless pressure from NGOs (non-government organisations) to stop oil palm planting, as well as the slowdown in new planting due to low prices up to 2019 and on-going moratorium policy, will inevitably keep Indonesia’s production growth low,” CPOPC said.

Environmental groups have in recent years criticised the palm oil industry for widespread clearing of tropical forests.

Leading industry analysts had in June forecast crude palm oil production Indonesia and Malaysia would rise.

James Fry, chairman of commodities consultancy LMC International, said Malaysian palm oil stocks will rise above 3 million tonnes by the end of the year.

Reporting by Mei Mei Chu; Editing by Simon Cameron-Moore