Felda Global Ventures Holdings Bhd., the world’s biggest crude palm oil producer, joined other Southeast Asian growers in highlighting the threat from a lingering El Nino to supplies of the most-consumed vegetable oil.
Fresh fruit bunch production at Kuala Lumpur-based Felda is down by 17 percent this year from a year earlier, it said on Monday. The reduction in yields is due to the impact of the El Nino, Zakaria Arshad, Felda’s group chief executive officer, told reporters in Kuala Lumpur. Crude palm oil prices will remain “choppy” and may climb to 2,600-2,800 ringgit a ton by August, he said.
Felda joins Golden Agri-Resources Ltd. and Olam International Ltd. in flagging the risks to production from El Nino, which helped drive futures in Kuala Lumpur to a two-year high in March. Stockpiles in Malaysia dropped to a 14-month low in April with production the lowest for the month since 2012. Futures ended at 2,608 ringgit a ton on Monday, up 5 percent this year.
Golden Agri-Resources, Indonesia’s largest palm oil producer, anticipates El Nino to last longer than initially expected and will likely cut the company’s production by 10 and 15 percent this year, Chief Financial Officer Rafael B. Concepcion Jr. said on Friday. Global palm oil production may drop 2 percent this year to 61.25 million tons, the first decline in output in more than 20 years, Oil World, a Hamburg-based researcher, said this month.