Successful Farming (24/08/2020) - KUALA LUMPUR, Aug 24 (Reuters) - Malaysia's FGV Holdings Bhd (FGV) said on Monday it expects crude palm oil prices to fall in the second half of the year with a dip in demand in the fourth quarter.
The world's largest crude palm oil producer estimated crude palm oil prices to trade between 2,400 and 2,600 ringgit ($574.85-$622.75) a tonne.
Malaysia benchmark crude palm oil has rallied by about 16% since June to 2,689 ringgit a tonne on Monday, buoyed by recovering demand as coronavirus curbs have eased in many countries.
"Restocking in China and India was the main push for good crude palm oil prices, but we expect fourth-quarter demand to soften a bit," Haris Fadzilah Hassan, FGV's group chief executive, told a news conference.
Current prices cannot be sustained until the end of the year, he said.
The palm giant is also expecting the rainy season to persist until December due to a La Nina weather pattern.
FGV recorded a second-quarter profit of 20.5 million ringgit compared with a net loss of 52.2 million ringgit last year.
It swung to a profit on higher crude palm oil prices and narrowing losses in the sugar sector, recovering from a sharp first-quarter loss due to the coronavirus pandemic.
FGV had reported a net loss of 142.3 million ringgit in the first quarter on lower output and a demand slump due to the coronavirus outbreak.
Revenue rose marginally to 3.29 billion ringgit, up from 3.28 billion ringgit last year.
"However, overall performance was affected by the coronavirus pandemic which continues to spread globally," Haris Fadzilah said in a bourse filing.
Improvements to efficiency in its plantation operations helped normalise crude palm oil production despite losing 79,000 tonnes of unharvested palm fruit due to a partial lockdown to contain the virus, he said.
"We are mindful that the nascent signs of recovery may not be sustainable due to the volatility in global markets and economies," Haris Fadzilah added. ($1 = 4.1750 ringgit)
(Editing by Jacqueline Wong)
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