March 7, 2017 / 5:09 AM / 10 months ago

UPDATE 1-Global palm oil output seen rising 11 pct in 2017

* 2017 palm oil output to rise after drought hit yields yr ago

* Rising production, slowing Indian demand to anchor prices (Adds comments from industry official)

By Naveen Thukral and Emily Chow

KUALA LUMPUR, March 7 (Reuters) - World palm oil production is forecast to climb 11 percent to 65 million tonnes this year from 58.3 million tonnes a year ago as near-perfect weather boosts yields, a senior industry official said on Tuesday.

“We are seeing excellent weather since October, there have been ample rains to boost productivity across Malaysia and Indonesia,” said M.R. Chandran, a veteran industry official who now works as a consultant.

“Normally February and March are dry months but there have been very good rains.”

Indonesia and Malaysia account for around 80 percent of global production of palm oil, used in products ranging from cookies to soap and as a biofuel.

Rising production and slowing demand from top importers, however, are expected to keep a lid on palm oil prices.

India’s booming edible oil imports are set to decline or hold flat in the year to October 2017, failing to grow for the first time in six years, as near record domestic oilseed output boosts supplies, industry executives said.

The benchmark Bursa Malaysia crude palm oil futures fell to their lowest since early November last week on slowing demand and the outlook for higher production, although the market has since picked up on technicals and price gains for rival soybean oil.

Indonesia is expected to produce 34.8 million tonnes of crude palm oil in 2017, up from 31.8 million tonnes a year ago, when drought due to an El Nino weather pattern curbed yields, Chandran said on the sidelines of an industry conference.

Malaysia is expected to produce 20 million tonnes of palm oil this year as against 17.3 million tonnes in 2016, he said.

Another Malaysian industry official forecast the country’s palm oil production at 19-19.5 million tonnes in 2017, up 9-12 percent from the year before.

“Production will increase gradually and not sharply...(The increase will be seen) more significantly in the middle of the year,” said Lee Yeow Chor, chairman of the Malaysian Palm Oil Council, speaking on the sidelines of an industry conference on Tuesday.

Lee added that he did not expect to see a return of the El Nino later this year, based on current observations on plantation sites.

“The rains are still quite plentiful in various plantations,” he said. (Reporting by Naveen Thukral and Emily Chow; Editing by Richard Pullin and Kenneth Maxwell)

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