September 22, 2016 / 6:31 AM / 2 years ago

UPDATE 1-Malaysia's Sime Darby sees firm palm oil prices until March 2017

(Adds details, background)

By Rajendra Jadhav

PANAJI, India, Sept 22 (Reuters) - Palm oil prices are expected to remain firm until March as output reductions caused by the El Nino weather pattern have depleted inventories, a senior executive of Malaysia’s Sime Darby Bhd said on Thursday.

El Nino, a weather phenomenon that brings scorching heat across Southeast Asia, has lowered palm yields in top growers Indonesia and Malaysia.

“Production has started recovering from the super El Nino. In the last quarter (of 2016), we will see an improvement in production,” said Franki Anthony Dass, managing director of Sime Darby, the world’s largest palm oil planter by land size.

The producer expects 40,000 hectares of palm oil plantations to be ready for harvesting in 2016/17, Dass told a vegetable oil conference in the western Indian state of Goa.

Palm oil prices are expected to trade around 2,600-2,700 ringgit ($1,290.17) per tonne in the last quarter of 2016, he added.

Benchmark palm oil futures for December on the Bursa Malaysia Derivatives Exchange gained 0.2 percent to 2,683 ringgit ($653) a tonne at the midday break, and are up 3.4 percent for the week.

Sime Darby’s crude palm oil production may drop 10 percent in 2017 due to the El Nino, Dass said. It produced 9.6 million tonnes of palm oil during the 2015/16 crop year.

The production year of Sime Darby runs from July to June.

$1 = 4.1080 ringgit Reporting by Rajendra Jadhav; Editing by Malini Menon and Christian Schmollinger

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