(Updates with quotes, details)
KUALA LUMPUR, Nov 17 (Reuters) - The world’s largest producer of crude palm oil, Malaysia’s FGV Holdings Bhd (FGV) , warned on Tuesday that its fourth-quarter output would be hit by uncertainties over the weather and curbs to limit the spread of the coronavirus.
The Malaysian benchmark has rallied 18% over the period from July to September and crude palm oil (CPO) is now trading at 3,327 ringgit ($810.57) per tonne on lower than expected production and tightening supply.
“We expect both fresh fruit bunches and crude palm oil production in 4Q FY2020 to be impacted by weather uncertainties and partial lockdown in Sabah,” Haris Fadzilah Hassan, FGV’s group chief executive, said in an exchange filing.
As a result, the price of CPO would stay strong until the end of the year, he added.
Haris Fadzilah did not elaborate on the weather conditions, but heavy rainfall and floods brought by a La Nina weather pattern have already disrupted harvesting in Malaysia and neighbouring Indonesia, which are the world’s top producers.
Sabah is Malaysia’s largest palm oil producing state, where a partial lockdown was imposed last month in some districts after a surge in virus infections.
Pandemic-driven border closures this year have also worsened a shortage of workers to harvest the perishable palm fruit, further hurting output.
FGV, which is already grappling with a shortage of nearly 2,700 workers, said it expects the shortage in the fourth quarter to worsen by 4% from the last.
“We may face difficulties once borders open and workers who have been postponing their trip back home decide to go back,” Haris Fadzilah told an online media briefing.
FGV expects CPO prices to trade between 2,500 ringgit and 2,600 ringgit per tonne in the first half of 2021, but said its full-year outlook remained “very conservative”.
It posted a third-quarter net profit of 136.9 million ringgit ($33.37 million), versus a loss of 262.4 million a year ago, due to higher CPO prices and lower losses in its sugar sector.
Revenue rose to 3.99 billion ringgit.
FGV has completed the conditional sale and purchase agreement for two divestments worth 57.2 million ringgit, it added.
(Interactive graphic tracking global spread of coronavirus: here)
Reporting by Mei Mei Chu; Editing by Clarence Fernandez