Palm oil production under El Nino influence

Palm oil prices in an Exchange bath between El Nino and crude oil prices

The palm oil production in 2015 has comparatively favorable harvests in the months of peak season August to Oct rd.  2 million tonnes per Delivered monthly. But the month of Nov. has the feared losses as a result of El Nino drought brought. The yield slipped significantly down to 1.6 million tonnes .

In anticipation of the loss of production, the palm oil prices were again to approximately $550 per t increased. The expectation of further price increases were broken but by the sudden collapse of the crude oil price. Domestic demand and exports of palm oil declined significantly as a result of the low price competition between mineral and biodiesel.

The result is a so far still not seen inventory build-up of 2.6 million  t. this amounts possibly sufficient to mitigate any further crop losses. However, this year's El Nino weather event should stop until March 16. Thus, the seasonal decline in production could be speeded up significantly and cause a tight supply situation in the further course of the year at the end of.

Extent to which the current decline in the crude oil prices of duration is doubted.  According to expert opinions the courses could already with the spring economy back towards $60 the barrel move. The results of the recent climate conference in Paris could also provide more demand for renewable raw materials.

The palm oil prices provide low prices for competing products as the leader in the market for vegetable oils rapeseed, soybean and other oilseeds.  The quotes have moved closer to each other. The range is determined primarily at the upper end of rapeseed and soybean oil price.  At the bottom of the palm oil price is due to its low production.

The fallen crude oil price will become the determining factor for the prices of vegetable oils and their raw materials. Low mineral diesel courses click on bio diesel sales, so that demand for raw material amounts only to the extent of admixture of coercion.  Weak demand leaves so little room for price increases in a better than average powered oilseed market soy focusing.

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