No El Nino impact on palm oil until 2015 - Malaysia industry

Bareksa.com -  Palm oil output in Malaysia is expected to edge up to to 19.4 million tonnes this year, a senior industry official said on Tuesday, with any damage from a possible El Nino phenomenon likely to be felt only next year.

El Nino can induce droughts in some parts of the world while drenching others. Meteorology experts say the chances have increased that the weather phenomenon will strike this year.

A strong El Nino would lead to a severe dry spell over Southeast Asia where 85 percent of the world's oil palm is grown, curbing supplies of the tropical oil used to make biofuel as well as foodstuff, soaps and cosmetics.

"Should there be an El Nino in the coming 2-3 months, the impact will be felt early next year," said Makhdzir Mardan, chief executive of the Malaysian Palm Oil Association, a group of growers.

Despite a two-month dry spell earlier this year, crude palm oil production in the world's second-largest grower has so far exceeded estimates, jumping more than 17 percent in March on a month earlier to 1.50 million tonnes and rising again to 1.56 million tonnes in April.

But the drought meant palm fruit growth would wane at the end of the year, the MPOA said. Full-year output was expected to rise only 0.9 percent to 19.4 million tonnes from the 19.22 million tonnes produced in 2013.

This is slightly below a forecast for production of 19.52 million tonnes in 2014 by industry regulator, the Malaysian Palm Oil Board.

Dry and hot weather hinders growth of leaves and fruit of the tropical plant, curbing yields.

"The recent drought has caused spear formation on young shoots, which is an indication that leaves are not fully grown," Makhdzir said.

Indonesia, the world's largest palm oil producer, has also said it is unlikely to feel the impact of any El Nino weather pattern until 2015. (Source : Reuters)