NUSA DUA (Bali): Indonesia and Malaysia, the world’s largest palm oil producers, may experience slower output growth next year due to resurgent El Nino weather conditions, a top industry analyst said yesterday.
Drier weather from El Nino may hit yields, leading to tight palm oil supplies just as US and South American soyaoil from a record soya harvest enter markets from May, said Dorab Mistry, head of vegetable oils trading with Godrej International.
“El Nino is still very much a factor. We should watch out for the likely change in the weather from mid-December onwards,” Mistry told Reuters on the sidelines of the three-day meeting – Indonesian Palm Oil Conference and Price Outlook 2010 – on Indonesia’s resort island of Bali.
“All the indications show we will have a fairly moderate El Nino starting in December to at least the end of February.” London-based Mistry did not give forecasts for Malaysian and Indonesian production of the vegetable oil in 2010.
Malaysian palm oil stocks will peak at 2.1 million tonnes in December but will fall next year due to slower output growth and strong shipments to China and India for the first two quarters, Mistry said.
Analysts often refer to Malaysian palm oil stocks as data is more readily available compared to Indonesia.
Palm stocks normally correlate inversely with the price of the tropical oil but the strength in the broader commodity complex led by crude oil has provided much support to the recent palm price rally, offsetting concerns over high stock levels in the world’s number two producer.
Industry and government officials in both Indonesia and Malaysia have been more bullish on the 2010 output prospect as concerns of El Nino’s drier weather sapping palm oil yields have eased.
Indonesia, the world’s top producer, has lifted its 2010 palm oil forecast to between 22 to 23 million tonnes from 20.5 million tonnes earlier.
Malaysia has raised its 2010 output forecast to up to 17.7 million tonnes from a projected 17 million tonnes this year, the government said, despite expected heavy rains toward the year-end that are likely to complicate transport of palm oil to refineries and ports. – Reuters
Source : Business Times