Palm oil production in SE Asia likely to recover in 2011

18 June 2010 10:58  [Source: ICIS news]

SINGAPORE (ICIS news)--Palm oil production is likely to recover in 2011 as the La Nina weather pattern brings unusually wet weather to Indonesia and Malaysia boosting palm oil production in these regions, traders said on Friday.

“Periods of increased rainfall are generally positive for palm oil fruit production as palm fruit usually requires a lot of water to flourish,” a trader said.

However, some market participants said they believed that while wetter weather was essentially good for the palm oil fruit cultivation, it could hurt palm oil values as more supplies could put downward price pressures on the commodity.

On the other hand, some market participants welcomed higher palm oil yield as they said it meant that more stocks could be exported to overseas markets.

Indonesia and Malaysia, which account for close to 90 percent of global palm oil production, had experienced the El Nino weather pattern that brought drier season hurting palm oil yields this year, a Malaysian producer said.

According to the Malaysian Palm Oil Board, the fresh fruit bunch (ffb) yield, which is a measurement of palm oil yield, fell by 0.02 tonnes per hectare from1.48 tonne per hectare in April to 1.46 tonne per hectare in May.

Some producers attributed this fall in yield to the El Nino weather pattern.

Although Indonesia does not release official data on yield and export figures, producers in the country remained confident of strong second-half output this year as they believed that Indonesia was largely spared from the El Nino weather pattern seen in neighbouring Malaysia.

A company source from PT Astra Agro Lestari - Indonesia’s biggest publicly traded plantation company - said that crude palm oil production in May fell 3 percent to 295,932 tonnes from April.

Palm oil is generally used in a variety of applications including food, the making of fatty acids and fatty alcohols as well as in a biofuels.

La Niña is characterized by unusually cold ocean temperatures in the Equatorial Pacific, compared to El Niño, which is characterized by unusually warm ocean temperatures in the Equatorial Pacific, creating opposite weather effects.

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By: Serena Seng

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