KUALA LUMPUR – Crude palm oil (CPO) price is expected to average around RM2,500 per tonne this year, given the expected improvement in output and weather condition, said the Ministry of Finance.
In its 2016/2017 Economic Report, the ministry said as the supply of crude oil palm was affected by the El-Nino phenomenon, as such prices trended upwards.
During the first half of 2016, the average price of CPO increased 13.4 per cent to RM2,517 per tonne, recording the highest level of RM2,709 per tonne on April 1, 2016,” said the report, released in conjunction with the tabling of the 2017 Budget by Prime Minister Datuk Seri Najib Tun Razak today.
Consequently, in the first six months of 2016, fresh fruit bunches yield declined 16.2 per cent to seven tonnes per hectare while CPO production contracted 16.1 per cent to 7.6 million tonnes, which led to a decline in palm oil inventories to 1.8 million tonnes in June 2016.
The report also said the CPO production was severely affected by El-Nino phenomenon during the first half which resulted in the overall sluggish performance of the agriculture sector.
“However, the ending of the El-Nino weather condition is expected to increase production of CPO for the remaining part of the year,” it