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Indonesia palm prices to rise to US$600 per tonne amid output fall: analyst

[MALAYSIA] Indonesian palm oil prices are forecast to rise to as high as US$600 a tonne amid rising demand from the food and energy sector, slowing production growth and falling global palm and vegetables oil stockpiles, said industry analyst Thomas Mielke.

Benchmark palm oil prices on the Bursa Malaysia rose 1.2 per cent to 2,252 ringgit (S$743.34) a tonne on Tuesday, while Indonesian crude palm oil prices on a free-on-board basis were at US$508 a tonne on Friday.

"World stocks of palm oil and of all oils and fats (are) forecast to drop by 1 and 1.8 million tonnes respectively in January-September 2019," according to Mr Mielke's presentation for an industry conference in Karachi on Saturday that was reviewed by Reuters.

Palm oil stocks in Indonesia were at 3.9 million tonnes in November, having peaked at close to 5 million tonnes in July. Malaysian inventories climbed to a record high of 3.2 million tonnes in December.

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Mr Mielke, the editor of the Hamburg, Germany-based newsletter Oil World, also forecast that production growth in Indonesia will slow to 1.5 million to 2 million tonnes in 2019 from 4.2 million tonnes growth in 2018.

Meanwhile, Malaysian production is set to rise by 0.5 million tonnes in 2019 to about 20 million tonnes, after a drop of 0.4 million tonnes last year, he said.

"World output (will) rise by 2.8-3.2 million tonnes in Oct-Sept 2018/2019," said Mr Mielke.

Palm oil output in Malaysia last year edged down to 19.5 million tonnes, while Indonesia production was forecast at 47.6 million tonnes in 2018.

REUTERS