REPUBLIKA.CO.ID, NUSA DUA - Palm oil industry in Indonesia and Malaysia in 2016 would still be affected by El Nino. Analysts of Oil World Bulletin, Thomas Mielke, said supply of crude palm oil (CPO) globally next year would not be comparable with the needs of palm oil in food and energy sector, so that consumers would switch to other vegetable oils, such as soybean.
"It depends on El Nino. The CPO price may increase to 750-770 US dollars per ton in the next six months, but there will be a shift in global demand for cheaper commodities due to high price of CPO," said Mielke, in Nusa Dua, Bali.
Mielke estimated, CPO production of Malaysia and Indonesia tends to stagnate in the next year, both will be in 19.5 million and 33.6 million tons. Nevertheless, Indonesia could take advantage of these conditions if Indonesia focused in implementing biodiesel. Increased consumption of biodiesel in Indonesia would decimate CPO supply to the global market and optimize it for the domestic market.
Read: Palm oil industry in Indonesia and Malaysia supply 90 percent of world CPO
Director of Ganling Sdn Bhd, Lin Ah Hong, from Malaysia admitted that El Nino caused failure in oil production and fertilization. The extreme weather also made differentiation of flower formation in palm oil.
"Oil fields in east and south of Kalimantan are very dry. The fertilization is less," he added.
El Nino, said Lin, would lower Malaysian and Indonesian palm oil production up to 600 thousand tons and 2.2 million tons. This led to an increase in CPO price in the first and second quarter of 2016.
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