BALI: A positive undercurrent ran through the Indonesian Palm Oil Conference (IPOC) 2016 here today.
Vegetable oil analysts from around the world, who gathered here, gave uplifting palm oil price forecasts for the months ahead.
For the past month, palm oil futures on the Bursa Malaysia Derivatives Market averaged at around RM2,900 per tonne.
As 1,300-odd participants settled in at the Nusa Dua convention centre here, Hamburg-based ISTA Mielke GmbH analyst Siegfried Falk set the mood among the audience.
He said he foresees the ongoing palm rally holding up until next year.
“The current upcycle in palm oil will carry on for a while, at least until mid-2017.
“This year, global palm oil output is set to fall 6 per cent to just over 50 million tonnes,” Falk said.
He went on to explain that Malaysia’s palm oil output is expected to drop 12.5 per cent to 17.5 million tonnes; and by 4.5 per cent in Indonesia to 31.9 million tonnes, crimped by the prolonged El Nino drought.
The Indonesian Palm Oil Producers Association, or Gabungan Pengusaha Kelapa Sawit Indonesia (Gapki) executive director Fadhil Hasan was next to take the stage.
He observed that Indonesia, via its biodiesel mandate programme, has emerged as the world's second-biggest vegetable oil-consuming nation.
“So far, this year, we're seeing palm oil averaging at US$670 per tonne. Although Indonesia’s palm oil output is set to recover by two million tonnes to around 32 million tonnes next year, I think prices can still rise further to trade between US$680 and US$690,” Fadhil said.
LMC International Ltd chairman Dr James Fry said while he concurred with Oil World's optimism of supportive palm oil pricing in the months ahead, he thinks palm oil prices will settle in the mid-term.
“2017 should see a sharp rebound in palm oil output, some three million tonnes higher than this year,” he said.
“In view of this expected higher supply, palm oil free-on-board is likely to settle at US$500 per tonne by the third quarter of 2017 from this week's US$685 per tonne,” Fry added.
Godrej International director Dorab Mistry, who concluded the conference session, highlighted that he was feeling optimistic.
“If Brent crude oil continues to trade between US$45 and US$55 per barrel… I think palm oil would hold up at RM3,300 per tonne by the end of the first quarter of 2017,” he said.