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ocal firms and analysts are upbeat that crude palm oil (CPO) prices will gradually gain a foothold this year after a drop last year dragged down producers'€™ profits.

Global predictions, however, say otherwise.

Michael Kesuma, head of investor relations at PT Sampoerna Agro, which sells 90 percent of its product domestically, expected CPO to perform better this year, with prices projected to improve, although little disturbance might arise from climbing supplies of other vegetable oils.

'€œLast year was challenging, but compared to the previous year, the price of CPO was relatively stable and we are pretty optimistic that it will gradually improve through 2014,'€ he said.

'€œThe rupiah is weakening and the US dollar is strengthening, which is quite good for the international CPO price as it is benchmarked in the dollar.'€

Michael added that the government'€™s biofuel program would be another factor that supported better CPO performance.

In an attempt to reduce spending on oil and diesel imports, last September the government increased the obligation to blend diesel with biodiesel from the current 7.5 to a minimum of 10 percent.

The regulation, which is expected to be fully implemented this year, is projected to boost domestic consumption of palm oil.

Michael said his company hoped to boost production by up to 25 percent this year thanks to good weather and maturing plants.

He added that his company had yet to calculate this year'€™s total sales value as it would depend on the prices.

The company'€™s average selling price (ASP) in the first nine months of last year fell 16 percent from 2012 to Rp 6,612 (54 US cents) per kilogram.

But it managed to book an average selling price of Rp 7,150 per kilogram in the third quarter of 2013 alone, which is 5 percent higher than the same period a year before.

PT Astra Agro Lestari, a subsidiary of diversified conglomerate Astra International, also projected better performance this year, the company'€™s spokesman Tofan Mahdi said.

Tofan said that his company expected CPO production to rise by up to 10 percent this year thanks to the weather and better demand once the biofuel regulation was fully implemented.

Astra Agro'€™s ASP in January to November last year plunged by 5 percent to Rp 7,102 per kilogram. It had been Rp 7,474 per kilogram in the same period of 2012.

BNI Securities plantation analyst Yasmin Soulisa predicted that CPO prices might reach $900 to $920 per ton this year.

Yasmin said that compared to 2013 '€” when average CPO prices stood at $851 '€” this year'€™s inventory would not be as abundant and that would keep prices high throughout the year.

Bloomberg reported that palm oil fell the most in more than three weeks on concern that exports from Malaysia, the world'€™s second-largest producer after Indonesia, might decline as global supplies of alternative cooking oils increased.