The Star (28/09/2020) PETALING JAYA: The coming La Nina weather phenomenon that will bring heavier than usual rainfall may determine the pace of the current upward trend of crude palm oil (CPO) prices.
Plantation experts generally expect a 75% probability of La Nina occurring from October to December in the South-East Asian oil palm-growing regions. CPO recently rallied to trade at RM3,000 per tonne from a low of about RM2,000 per tonne in May, buoyed by the surge in the prices of its competing peer, soybean oil.
According to industry consultant MR Chandran, the prevailing high CPO price was basically due to a spike in soybean price and the anticipated lower CPO production from major producers Malaysia and Indonesia this year.
“We have witnessed a 13% rise in soybean prices over a month due to adverse weather conditions and increased use of soybean oil for conversion to biodiesel in the US.
“However, there is no doubt that the immediate impact of La Nina may lend support to CPO prices as heavy rainfall will affect the harvest of fresh fruit bunches (FFB) in the estates, resulting in the delay of crop evacuation, ” Chandran explained.
He told StarBiz that some oil palm plantations could also experience reduction in their production by about 5% to 10% as a result of flooding of the mature fields.
However, flooding is normally short term in nature, he added. Kim Loong Resources Bhd