Home / Agri News / El Nino to cut global palm oil output in 2016

El Nino to cut global palm oil output in 2016




  • An El Nino weather pattern is likely to cut palm oil output in Indonesia and Malaysia by 5-6 percent in 2016 and lift prices to 2,500 ringgit ($606.06) per tonne in the first quarter, the chief executive of plantation firm Felda Global Ventures said. An ongoing dryness in the top two palm oil producers has already pushed benchmark futures up nearly 20 percent from a 6-1/2-year low hit in August. Prices were at around 2,218 ringgit on Friday.

    “Yields are likely to fall due to the prolonged dryness we are facing,” said Mohd Emir Mavani Abdullah of Felda Global Ventures Holdings Bhd, the world’s third-largest palm plantation operator. “Lower production because of El Nino will strengthen prices going forward,” he told Reuters. Palm futures had soared 57 percent in 2009, partly due to El Nino, which typically leads to scorching weather across Asia. This year, the El Nino could start hurting Malaysian yields in the last quarter, pushing down local stockpiles to 2 million tonnes by end-December amid strong exports, Abdullah said.

    Malaysian palm oil stocks likely hit an almost three-year high of 2.65 million tonnes in September. Stockpiles will drop further in 2016 on rising use of palm-based biodiesel in Indonesia and Malaysia, Abdullah said. The two countries account for about 85 percent of the world’s palm oil supplies. This year, according to veteran analyst Dorab Mistry, they will produce 52 million tonnes.

    Indonesian President Joko Widodo has signed a regulation to impose a $50 per tonne levy on crude palm oil shipments that will be used to help fund biodiesel subsidies. “Indonesia is very aggressive on biodiesel. This will soak up all the excess palm oil seen in the market,” Abdullah said. Abdullah added that Felda was looking to tie up with Indian edible oil refiners to invest in Indonesian plantations.

    Refiners in the top palm oil importer, India, are trying to enter the plantations business to meet rising local demand. “Investing in the plantation sector in Indonesia is a long-term play. Now is right time since price of commodity is lower, entry point is much cheaper compared to few years ago,” said the Felda CEO. Earlier this year, Felda announced plans to purchase a stake in Indonesia’s PT Eagle High Plantations Felda is also keen to jointly work with an Indian firm to set up a port-based refinery in the country, Abdullah said. “We have identified a couple of potential partners in India,” he said, without naming them, but added that investment plans would be finalised in four-five months.

    Source

    About Staff

    This post is published by AgriHunt staff member. If you believe it should have your name please contact md@agrihunt.com

    Check Also

    rabi-festival-brochure-1-638

    Rabi festival and goat show UAF schedule 2016

    Report Issue: * Suggest Edit Copyright Infringment Claim Article Invalid Contents Broken Links Your Name: …

    Leave a Reply

    Be the First to Comment!

    Notify of
    avatar

    wpDiscuz