KUALA LUMPUR - Malaysia's crude palm oil (CPO) production is expected to rise only marginally in the next few months, while exports are expected to pick up, state agency the Malaysian Palm Oil Council (MPOC) said on Thursday.
"Our estimate for the price is to remain between 3,500 ringgit-3,800 ringgit ($840.54-$912.58) in the next three months," MPOC chief executive officer Wan Zawawi Wan Ismail told Reuters.
The benchmark CPO price in the world's second largest producer has plunged about 23% since peaking at a record high in mid-May. It traded at around 3,463 ringgit ($831.65) a tonne on Thursday afternoon.
Exports are expected to pick up in July and August following the price correction, which should encourage purchases from key markets China and India, Wan Zawawi said.
Malaysia's crude palm oil production is expected to grow in the next few months, but only marginally due to a pandemic-induced labour shortage and movement restrictions, he added.
Wan Zawawi said that CPO prices will also be swayed by weather patterns in major soybean exporter United States, as well as news flows about changes in biodiesel mandates and incentives in the United States.
"If hot and dry weather conditions manifest themselves in July in the U.S., further rallies in price is possible."
Fitch Ratings said in a note it expects CPO prices to fall to $600 a tonne by the fourth quarter, as output of palm oil and soyoil is expected to increase with the end of the La Nina weather pattern.
However, it also cautioned that Malaysia's output will be "below normal" due to the labour crunch.
($1 = 4.1640 ringgit)
(Reporting by Mei Mei Chu; Editing by Jason Neely and Kim Coghill) ((firstname.lastname@example.org; +6-139-492-9424; Reuters Messaging: @meixchu on Twitter))