January 18, 2018 / 6:19 AM / a year ago

UPDATE 1-Malaysia palm oil output to edge up in 2018 -industry body

* MPOB expects 2018 Malaysia output to hit 20.5 mln T

* Production picking up as El Nino impact fades

* Exports seen up 5.1 pct at 17.4 mln T (Adds comment, details)

KUALA LUMPUR, Jan 18 (Reuters) - Palm oil output in Malaysia, the world’s No.2 producer of the commodity, will rise by 3 percent in 2018, an industry body forecast on Thursday.

The Malaysian Palm Oil Board (MPOB) expects production to climb to 20.5 million tonnes from 19.9 million tonnes in 2017, the group’s director general, Ahmad Kushairi, said at an industry conference.

“We expect momentum will still be there, that’s why we are forecasting production will be moving forward,” Ahmad said.

Malaysian production of the edible oil is widely expected to rise this year as fields continue to recover from the dry weather effects of a 2015 El Nino. The weather pattern can impact fruit yields for up to two years.

Malaysia’s exports are expected to increase 5.1 percent to 17.4 million tonnes this year, though a stronger ringgit will be a “challenge”, Ahmad said.

A stronger ringgit, the currency palm oil is traded in, usually makes the vegetable oil more expensive for foreign buyers. The ringgit is currently trading near an 18-month high.

MPOB expects the country’s palm oil stockpiles to drop 15.8 percent to 2.3 million tonnes in 2018, potentially supporting prices.

Palm oil stockpiles in Malaysia climbed to their highest in over two years at the end of December. MYPOMS-TPO

Earlier this month, Malaysia said it would suspend export tax on crude palm oil for three months to curb stockpiles and boost prices.

Traders have said the move will make Malaysian palm oil more competitive, especially in price-sensitive markets such as India and China. (Reporting by Emily Chow; Editing by Christian Schmollinger and Joseph Radford)

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