A global vegetable oil supply deficit next year is still very likely due to the impact of the El Niño weather pattern, while demand growth is still very high, leading analyst Thomas Mielke said.
Mielke, head of Hamburg-based analyst firm Oil World, said global demand was seen growing by 5.6 million metric tonnes in the 2023/24 season, but world production growth of palm oil, which make up a big chunk of global edible oil, would be the smallest in four years at 0.2 million to 0.3 million tonnes.
He told conference participants in Bali that palm oil output from Indonesia, the world's biggest palm oil exporter, would stagnate in 2024, while second-largest producer Malaysia's output would be close to 18.4 million tonnes.
Mielke said Indonesia's declining trend of palm oil yields was "alarming" and had so far not been reversed. He anticipated a further year-on-year decline in palm oil exports from the three biggest producers in the January-June period.
Indonesia is likely to ship 30.5 million tonnes of oils and fats this year, and Malaysia will export 17 million tonnes, he said.
Palm oil output from the world's top producer, Indonesia, is seen dropping at least a million metric tonnes next year, while output from rival Malaysia is seen unchanged, industry analyst Dorab Mistry said.
Benchmark palm oil futures FCPOc3 on the Bursa Malaysia are seen trading between 3,700 and 4,500 ringgit per tonne between now and June, he told an industry conference in Indonesia's Bali.
His price forecast was unchanged from his estimate in September.
He said most negative factors affecting palm oil demand have passed now.
"The key to palm oil pricing will henceforth be the severity of the El Niño drought, production and biofuel announcements," he said.
Hot and dry weather as a result of the El Niño phenomenon usually reduces palm oil yields in the main producers, Indonesia and Malaysia.
Meanwhile, he expected Indonesia to implement mandatory B35, the biodiesel using 35% palm oil mix, for the full year in 2024.
He also expected Indonesia to tinker with its policy to require palm oil producers to sell a portion of their output domestically. A government official earlier said Indonesia will continue the so-called Domestic Market Obligation policy into 2024.