KUALA LUMPUR (April 8): The production of palm oil is expected to normalise in June this year, after it was hit by the El Niño weather phenomenon and will thus start to moderate the price of crude palm oil (CPO), according to IOI Corp Bhd managing director and chief executive officer Datuk Lee Yeow Chor.

Lee said on Monday that CPO prices have gone up quite significantly over the past month and a half, but maintained that it is a "temporary trend".

"Of course, this (price increase) is underpinned by people's expectation about the effect of the El Niño [in] restricting the production of palm oil. I think this will be a temporary trend. And I believe come June, production will normalise," he told reporters at a press conference on Monday, in conjunction with IOI Corp's signing of a shareholders' agreement with Nextgreen Global Bhd to develop a paper pulp plant in Pahang.

"It's difficult to say, but I would say that when production increases, the prices may moderate slightly but still at a very strong level," Lee added.

IOI Corp Bhd MD and CEO Datuk Lee Yeow Chor: CPO prices have gone up quite significantly over the past month and a half, but it is a "temporary trend". (Photo by Patrick Goh/The Edge).

Malaysian palm oil futures reached a two-and-a-half-year peak of over RM4,440 per metric tonne last week, amid expectations of low supply due to weather patterns.

The Malaysian Palm Oil Board (MPOB) said in January that the price of CPO will range between RM3,900 and RM4,200 per metric tonne in 2024, with limited palm oil supplies supporting prices.

In 2023, the CPO benchmark contract on the Bursa Malaysia Derivatives exchange averaged RM3,809 per metric tonne, down 25% from 2022.

In terms of supply, MPOB estimated Malaysia's palm oil production to rise to 18.75 million metric tonne in 2024, up 1.1% from 18.55 million metric tonne last year.