KUALA LUMPUR – Climate change continues to be the biggest challenge for the agricultural commodity sector, including palm oil, this year, said an industry expert.
Godrej International Trading and Investments Pte Ltd director Dorab Mistry said the sector is facing great danger as capricious weather conditions could destroy crops within two days.
He also cautioned that the El Nino climate phenomenon could hit a wide geographical range from Pakistan to Australia, and that would have a profound effect on agricultural commodity production.
“I don’t know if the El Nino phenomenon will start in June, July, or August, so it is impossible to say if Malaysia can produce 18 million tonnes of crude palm oil this year,” he said at the 34th Palm and Lauric Oils Price Outlook Conference and Exhibition here today.
Mistry said that if El Nino does not begin in June or July, palm oil production would run as normal and consequently, prices could decline after August this year.
However, should the new cycle begin, psychologically, palm oil prices would trend higher, he said, adding that with aggravated climate change, industry players could not be bearish on agriculture prices anymore.
“The path to safety (for consumers and producers) is by hedging and careful positioning in the market,” he said.
Nonetheless, he expects the price outlook for palm oil to range between RM3,500 and RM5,000 per tonne by end-May 2023 for Malaysia.
Mistry said that the palm futures on Bursa Malaysia Derivatives third-month trading would be between RM4,000 and RM5,000 till August 2023.
Meanwhile, following tighter palm oil stocks in Indonesia, he said export vessels are keener to ship from Malaysia, as the discount of palm oil prices in Indonesia or Malaysia has virtually no gap.
“This will lead to better and higher exports in Malaysia than anyone expected, and it is the Malaysian exports and stocks that will determine the price output, not Indonesia’s,” he added. – Bernama, March 8, 2023
