Indonesia's palm output climbs to record in 2017

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JAKARTA (Jan 30): Palm oil production in Indonesia rose about 18% from a year earlier to a record high in 2017 on favorable weather, according to the Indonesian Palm Oil Association.

Output climbed to 38.2 million metric tons from 32.5 million tons in 2016, Togar Sitanggang, secretary-general of the association, known as Gapki, said on Tuesday. Total production, including palm kernel oil, rose to 42 million tons from 35.6 million tons in 2016, Sitanggang said.

Palm oil, used in everything from chocolate to shampoo, slumped 19% in 2017 as inventories increased and India raised import duties, curbing purchases by the world’s biggest buyer. Concerns about elevated stockpiles and weak demand remain, threatening further price declines this year.

"We had a very good year in 2017. Trees received enough water and helped increase production," Sitanggang told reporters in Jakarta.

Palm oil reserves stood at 4.02 million tons as of December, Gapki said. That compares with a median estimate of 3.4 million tons in a Bloomberg survey published on Jan. 23. Exports increased 23% to 31.05 million tons, it said.

Global palm oil production is set to reach a record in 2018 as the yield-sapping effects of the 2015-16 El Nino finally dissipate. Supply will increase between 5 million and 6 million tons this year, according to LMC International Ltd. Chairman James Fry, who predicted Indonesian output at 40 million tons and Malaysian production at more than 21 million tons. Thomas Mielke, executive director at Hamburg-based Oil World, says world palm oil production will rise about 2.6 million tons to 70.1 million tons.