Palm oil production seen impacted if rainfall continues into second quarter

KUALA LUMPUR: Palm oil production may be impacted if heavy rain continues into the second quarter, said one industry player.

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

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

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

“And I think it is starting to dry up now,“ he told a UOB Kay Hian palm oil webinar on Monday.

He said that while La Nina could disrupt supplies in the first quarter, production will trend higher in the first half (1H) of the year and into the first quarter of 2024.

And if El Nino emerged in 2H this year, it is unlikely to impact supplies and crude palm oil (CPO) prices until the second half of next year, he added.

He reckons that the current inventory of 2.1 million tonnes remains supportive of the current CPO price level. “CPO prices are expected to weaken in the second half of the year due to higher production and subdued demand,“ he said.

Nevertheless, he said the current La Nina, expected to end this month, can still impact soybean production in Argentina and southern Brazil, boosting the commodity’s prices.

The situation is not expected to impact soybean planting in the United States, Ling added. – Bernama