Tuesday, September 18, 2012

RTRS- Malaysia sees little El Nino risk so far to palm oil

PARIS, Sept 14 (Reuters) - There has been no sign of extreme weather in Malaysia linked to the El Nino phenomenon that could affect palm oil output in the world's second-largest producer of the edible oil, government and industry officials from the country said on Friday.

Forecasters have said that the El Nino weather pattern, which involves a warming of surface temperatures in parts of the Pacific Ocean that can trigger drought in southeast Asia and Australia, has re-emerged and could last several months.
"It's already September and I haven't seen too much of it myself," Malaysian Commodities Minister Bernard Dompok told a news conference in Paris, referring to El Nino. "Sometimes these predictions are not as disastrous as they sound."

Palm oil producing regions have seen rainfall in recent weeks, Lee Yeow Chor, chairman of the Malaysian Palm Oil Council, an industry lobby, told the news conference.

The last severe El Nino in 1998 killed more than 2,000 people and caused billions of dollars in damage to crops, infrastructure and mines in Australia and other parts of Asia.

Malaysian officials reiterated a forecast for palm oil production of 18.4 million tonnes this year, down from 18.9 million tonnes in 2011.

Labour shortages on plantations had contributed to the expected drop in output, they said.

The production fall is set to widen the gap with top producer Indonesia, which is also challenging Malaysian palm oil exports through tax changes.

The Malaysian government was still considering how to help its industry compete against Indonesian exports, Dompok said, declining to say what measures would be proposed and when.

Protecting the interests of small growers would be a key concern in the government's response, he added.

Malaysia has already increased its quota of tax-free palm oil exports for this year to 5 million tonnes from 3 million in a move partly seen as a reaction to Indonesia's policy.