El Nino Forecast Brings 3% Palm Oil Output Decline Next Year
Indonesia and Malaysia are bracing for a decline in palm oil production next year due to prolonged dry weather caused by El Niño. According to estimates from seven analysts surveyed by Bloomberg News, production will fall about 3% in both countries. In Indonesia, output is expected to drop to 49 million tons, while in Malaysia, it's predicted to decrease to 19.5 million tons.
The dry weather, which has been exacerbated by El Niño, has already disrupted fertilizer application, harvesting, and transportation in the key palm-growing region of Kalimantan. The Indonesian Palm Oil Association had initially forecast a 5% decline in output, but has since revised its estimate to 3%. Still, supplies remain ample for now.
The effects of El Niño on palm yields typically emerge with a lag, so the full impact may not be felt until next year. However, benchmark palm oil prices are expected to rise towards 5,000 ringgit ($1,226) a ton due to tighter global supplies.