Crude palm oil (CPO) output in Indonesia, the world's top producer of the vegetable oil, is seen rising 8 percent from a year ago to 4.5 million tonnes in the first quarter, an industry group said on Thursday. Indonesia's government sees full-year output rising 14 percent to 25.7 million tonnes this year.
Derom Bangun, vice chairman of the Indonesian Palm Oil Board (IPOB), said he expected demand and weather problems to push up prices for the edible oil from around $1,000 a tonne now, despite the increase in Indonesian output. "I am optimistic the price will go up in the first quarter to reach $1,200 per tonne," Bangun said. "That's because CPO output cannot meet global demand, which is growing significantly."
Bangun said he estimated the average CPO price in 2012 would be $1,050 a tonne. "Drought in South America will also be one of the main factors for the price rise," Bangun said. Benchmark April palm oil futures on the Bursa Malaysia Derivatives Exchange were trading 1.2 percent down at 3,140 Malaysian ringgit ($1,000) per tonne on Thursday. Since December, prices have gained about 4 percent. However, a Reuters poll of 25 analysts forecast a median 3,000 ringgit ($960) per tonne average price for this year, due in part to faltering demand as global growth weakens because of Europe's debt crisis.
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