SINGAPORE (Dec 7): 2017 could finally be a better year for commodities as higher fresh fruit bunches output and crude palm oil prices fuel improved earnings for upstream palm oil companies.

“The key driver for 2017 earnings will be higher FFB (Fresh Fruit Brunches) yields as the El Nino effect fades,” said CIMB analyst Ivy Ng in a note on Tuesday, adding that the higher yields would reduce production costs per tonne for crude palm oil (CPO).

Ng points out that FFB yields in 2016 had been hurt by the El Nino drought and the haze in 2015, but weather conditions have since improved. The majority of the yield recovery is expected to be seen in 2HFY17.

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