Palm oil output to see only slight growth in 2020, deficit likely - analyst Fry
By A. Ananthalakshmi
KUALA LUMPUR, Nov 20 (Reuters) - Top palm oil producers Indonesia and Malaysia will see little growth in output next year, potentially leading to a supply deficit and higher prices, leading industry analyst James Fry said on Wednesday.
Indonesia, the biggest producer, will grow production by 2%-3% next year, said Fry, adding that output will be hurt by drought and lower fertiliser use
The outlook for Malaysia's production growth was also bearish, he said, although he did not provide estimates.
"Overall, you are getting fairly limited production growth at best. On the supply-demand side, it's tipping towards a deficit," Fry told Reuters on the sidelines of an industry conference in Kuala Lumpur.
Fry is the chairman of consultancy LMC International and his forecasts are closely watched in the palm oil industry.
"We are set for higher prices," he said. He reiterated his earlier forecast that European crude palm oil prices will climb to more than $700 a tonne in the first quarter of 2020.
Crude palm oil prices in Rotterdam <PALM-MYCRD-C1> closed at $675 a tonne on Tuesday. Benchmark palm oil prices on the Malaysian exchange rose over 2% to 2,680 ringgit ($644.70) by midday on Wednesday.
Indonesian palm oil output last year was 47.6 million tonnes, while Malaysian output totalled 19.5 million tonnes.
Fry said palm oil demand next year will be driven by Indonesia's biodiesel programme, which aims to increase palm oil content in diesel fuel.
Indonesia, the world's leading palm oil producer, aims to implement the so-called 'B30' programme - meaning diesel with 30% palm-based bio content - from 2020. That represents an expansion from the current 'B20' mandate for 20% biofuel content.
Malaysia said on Tuesday it will begin implementing B20 in stages from early next year.
($1 = 4.1570 ringgit) (Reporting by A. Ananthalakshmi; editing by Richard Pullin)