KUALA LUMPUR (Feb 22): Sime Darby Plantation Bhd, the world’s largest palm oil producer by acreage, said on Thursday palm oil prices may stay elevated at around current levels this year.

Crude palm oil may range between RM3,700 and RM3,900 per tonne this year, said its managing director Datuk Mohamad Helmy Othman Basha at a virtual earnings briefing. “CPO prices could go above RM4,000 per tonne, but the average will be around that level,” he noted.

Output at its Indonesian operations may be dragged by the El Nino weather phenomenon, Mohamad Helmy said. Production in Malaysia, meanwhile, is expected to return to pre-Covid levels this year, he noted.

The benchmark palm oil futures for May delivery was trading at RM3,847 per tonne at 5.00pm on Bursa Malaysia Derivatives.

Prices of palm oil, used in everything from lipstick to cooking oil, have gained about 4% so far this year amid concerns over supply. The El Nino weather conditions raise heat and reduce rainfall, stressing oil palm trees.

During the Oct-Dec quarter, Sime Darby Plantation sold crude palm oil at an average of RM3,688 per metric tonne, down 8% year-on-year (y-o-y) from RM4,005 per metric tonne, according to an exchange filing. Fresh fruit bunches’ production meanwhile, rose 15% to 2.39 million tonnes from 2.07 million tonnes over the same three-month period in 2022.

Net profit for the quarter fell more than 64% from a year earlier to RM200 million, weighed by lower average realised prices. Revenue decreased 6.88% y-o-y to RM5.28 billion, from RM5.67 billion recorded for 4QFY2022.

Shares of Sime Darby Plantation closed 0.4% lower at RM4.50 on Thursday, with 3.25 million shares changing hands. 

Source : TheEdge