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Malaysia's top palm oil producer warns El Nino may hit output
Malaysia is the world's second biggest producer of palm oil and fall in its production could lift palm oil futures FCPOc3 already trading near their highest level in four months.
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A worker checks the quality of palm fruit from a dwarf palm oil tree at the Malaysian Palm Oil Board research plantation in Kluang, Johor, Malaysia, on Sept. 18. The Malaysian government research center is cloning a new variety of palms bred to be 30 percent smaller than regular oil palms when they mature. That is a significant advantage for farmers harvesting the red and orange fruit that can grow up to five stories high and may help revolutionize a US$19 billion Malaysian export crop. (Bloomberg/Joshua Paul)
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alaysia's palm oil output in 2023 could be lower than expected if El Nino weather pattern develops in the second half of the year as forecast by some weather agencies, the country's biggest palm oil producer FGV Holdings told Reuters on Tuesday.
Malaysia is the world's second biggest producer of palm oil and fall in its production could lift palm oil futures FCPOc3 already trading near their highest level in four months.
Malaysia production is expected to rise to around 19 million tonnes from 18.45 million tonnes in 2022, but the output could drop marginally if El Nino develops as forecast, Nazrul Mansor, chief executive of FGV told Reuters in an interview.
An El Nino episode usually results in below-average rainfall in main palm oil producersIndonesia and Malaysia, cutting yields and pushing up global prices.
"Climate change is making managing plantations a difficult job. There was flooding earlier this year and if El Nino develops, then there would be a period of dry spell in the second half of year," he said.
The bigger impact of El Nino on production would be felt in 2024, Mansor said.
FGV is preparing for El Nino by planning water management and has developed drought-resistant varieties, he added.
