Malaysian palm oil output to shrink because of El Nino

Malaysian palm oil output is predicted to fall by 2m tonnes in 2016 because of increasingly dry conditions caused by El Nino, say experts. Malaysia is the world's second largest producer of palm oil, therefore this is expected to increase prices that are already at a two-year high. This follows our report last week, that the El Nino's dry spell could last until May. Palm oil output in Indonesia is also expected to be impacted by the weather phenomenon. 

The decline in production, its sharpest in at least seven years, could bring stronger rallies to benchmark palm oil prices , which have risen 5% in the last two weeks to a two-year high of RM2,726 (US$676) a tonne on Friday.

For the first half of calendar year 2016, Malaysian output is expected to decline by a million tonnes, Mistry said at the Thirteenth International Oils & Oilseeds Conference in Beijing.