Indonesian palm oil output under El Nino’s shadow

Palm oil production will rebound more significantly next season in Malaysia from drought-depressed levels than in Indonesia, where the dearth of rainfall may leave a long shadow over output, reported.

Output of the vegetable oil in Malaysia will, after falling for two successive seasons for the first time on data going back 50 years, recover by 1.5m tonnes in 2016-17, on an October-to-September basis, it reported the US Department of Agriculture bureau in Kuala Lumpur as saying.

The recovery – which would take output to a record high of 21 million tonnes – reflects expectations of “favourable weather patterns”, given the likely passing of the El Nino weather pattern blamed for dryness which has cut output in Malaysia, the second biggest producing country, and in top-ranked Indonesia, the website reported.

The estimate foresees palm oil yield recovering to 7.62 tonnes per hectare, from the multi-year low of 7.22 tonnes per hectare set in 2015-16, while harvested area will rise by 100,000 hectgares to 4.9m hectares.

“Yield… will rebound as the weather improves in line with increases in [area],” the bureau said.

However, Indonesian output, seen in 2015-16 ending a 16-year run of uninterrupted growth, will recover by a more modest 500,000 tonnes, to 33.5 million tonnes, Agrimoney quoted USDA staff in Jakarta as saying.

“The 2015-16 El Nino phenomenon has had a significant effect on palm plantings,” the USDA’s Jakarta office said, citing information from “industry sources”.

“Dry weather through 2015 and into 2016 delayed plantings, leaving little space in nurseries for new seedlings.”

Oil palm seed sales fell by 9 percent last year – taking to 45 percent their decline since 2012.

With Indonesia’s own palm oil consumption rising too, backed by growing use of the vegetable oil to make biodiesel, the country’s exports would in 2016-17 remain at 24.0m tonnes, below the record of 25.3m tonnes achieved last season, Agrimoney said,

The estimate for 2016-17 exports assumes Indonesian palm oil inventories falling to 386,000 tonnes at the close of the season, the smallest in seven years.

Malaysian palm oil exports were forecast recovering by 800,000 tonnes to 18 million tonnes in 2016-17, the second highest figure on record, it said.


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