Preparations for the La Nina weather pattern could minimise the decline in palm oil output to between 0.2 million and 0.3 million tonnes, said an official from Felda. — Reuters photo
KUALA LUMPUR: Malaysia’s Felda Global Ventures chief executive Datuk Zakaria Arshad believes that crude palm oil prices will rise in 2016 because of lower yields from the impact of the El Nino weather phenomenon.
Palm oil is expected to average RM2,500 per tonne in 2016, up from RM2,275 last year, Zakaria said at a media briefing for Felda’s results.
The average is higher than the RM2,400 per tonne forecast in a Reuters poll in February.
The El Nino weather event brings dry weather across Southeast Asia, denting palm’s fruit yields and lowering output in Indonesia and Malaysia, the world’s two largest producers.
Preparations for the La Nina weather pattern could minimise the decline in palm oil output to between 0.2 million and 0.3 million tonnes, said an official from Felda, which is the world’s third-largest palm plantation operator.
Leading industry analyst James Fry had earlier estimated that the La Niña could reduce global palm oil output by 0.4 million tonnes per year.
“Ample preparation work can reduce the impact of the La Niña,” Zakaria said.
The Australian Bureau of Meteorology (BOM) said on Tuesday there was a 50 per cent chance of a La Nina weather pattern happening, which brings rains across Asia.
The BOM also said that the El Nino, the strongest in 20 years, had ended.
Felda on Tuesday reported a first-quarter net loss of RM65.5 million due to low yields from the El Nino, compared with RM3.57 million in net profit over the same period last year. — Reuters