Palm oil production will be impacted if rain continues in Q2

KUALA LUMPUR: Palm oil production could be impacted if heavy rain continues in the second quarter, an industry stakeholder said.

AH Ling, director of plantation company Ganling Sdn Bhd, said the current flooding is expected to have minimal impact on production, but production numbers would have to be revised if the rains continue.

“Right after December we forecast an improvement in domestic production from 18.4 million tons to 19.1 million tons. Maybe (it needs) a slight adjustment.

“Typically, the impact of La Nina on palm production is very different compared to El Nino. La Nina is very physical, but not all areas are flooded.

“And I think it’s starting to dry up now,” he said Monday in a palm oil webinar hosted by UOB Kay Hian.

He said while La Nina could disrupt supply in the first quarter, production will ramp up in the first half (1H) of the year and into the first quarter of 2024.

And if El Nino comes in the 2nd hour this year, it’s unlikely to affect crude palm oil (CPO) supplies and prices until the second half of next year, he added.

He expects the current inventory of 2.1 million tons to continue to support the current CPO price level. “CPO prices are expected to soften in the second half of the year due to higher production and subdued demand,” he said.

Still, he said the current La Nina, which is expected to end this month, may affect soybean production in Argentina and southern Brazil and push commodity prices higher.

The situation is not expected to affect soybean cultivation in the United States, Ling added. -Bernama