Palm oil to rise above 4,000 ringgit on signs of El Niño


KUALA LUMPUR: Malaysian palm oil prices may rise to over 4,000 ringgit per ton in the second half of 2023 The young Weather Pattern Evolving, Industry Analyst Dorab Mistry said on Wednesday.
Palm oil benchmark futures on the Bursa Malaysia Derivatives Exchange fell to 3,740 ringgit ($843.29) a tonne on Wednesday afternoon.
“EL Niño is coming,” said Mistry, the director of an Indian consumer goods company Godrej Internationalsaid at an industry conference in Dubai.
Hot, dry weather resulting from the El Niño phenomenon is likely to reduce yields in key producers Indonesia and Malaysia and push up global cooking oil prices.
The World Meteorological Organization last week forecast a 60 percent chance of the weather changing from the La Niña weather pattern to El Niño in May-July this year. That probability will rise to 70-80% between July and September, it said.
Mistry said this gives room for palm oil prices to rise in the second half of 2023 unless there is a deep global recession and energy prices fall.
Another important factor to watch is the Black Sea export corridor between Russia and Ukraine, Mistry said.
If the Black Sea export corridor stays open, palm oil futures will struggle between 3,400 and 4,000 ringgit until a weather problem hits, he said.
Mistry forecast that top producer Indonesia’s production will increase by 1.5 million tons in 2023.
He put Malaysia’s production at 18.5 million tons in 2023, little change from 18.45 million tons last year.

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