MUMBAI: Indonesian palm oil production is expected to hit 40 million tonnes in 2018, up from an earlier forecast of 38.5 million tonnes, industry analyst Dorab Mistry said on Friday.
"The expansion of palm plantings in Indonesia has been much higher than expected," said Mistry, according to a copy of his presentation at the Globoil industry conference in Mumbai.
Due to the seasonal rise in palm oil production at the end of the year, Mistry said palm stocks for the last quarter of 2018 "look heavy".
Palm oil end-stocks in Malaysia last rose to a seven-month high in August at 2.49 million tonnes and are set to climb higher in the last quarter of the year.
"By end December 2018, Malaysian stocks can rise to between 3-3.3 million tonnes. It will depend on how quickly palm prices are allowed to drop," said Mistry, who is also the director of Indian consumer goods company Godrej International.
"Palm stocks in Indonesia are already close to 5 million tonnes and will keep rising gradually month after month."
Mistry maintained an earlier forecast that palm prices needed to fall to 2,100 ringgit ($507.25) per tonne to regain competitiveness, while refined, bleached and deodorized palm olein prices should be at $560 per tonne on a free-on-board basis to recapture markets.
He also reiterated earlier projections that Malaysia's palm output in 2018 would decline to 19.2-19.5 million tonnes from the previous year.
Benchmark palm oil prices are currently trading at two-month lows, and last closed down 0.2 percent at 2,161 ringgit a tonne at the midday break on Friday. ($1 = 4.1400 ringgit)
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