Palm Oil Internet Seminar

Section 1 : CPO Price Trend:
Weather – New Catalyst Impacting Palm Oil Price
By: Mr. Ling Ah Hong

Mr. Ling graduated from the University of Malaya with a Bachelor of Agricultural Science (Honors).

He has more than 40 years of experience in research and management of plantation crops and companies. He was a former Executive Director of IJM Plantations and his other past positions include: Research Officer with FELDA, Senior Agronomist in Dunlop Estates (now part of IOI Corporation), Plantation Controller of Perlis Plantations (now part of Wilmar International), Chief Operating Officer for Hap Seng Plantations. Mr. Ling has authored and co-authored numerous publications on oil palm and cocoa in Malaysia. He is also a frequent speaker at international conferences and seminars organized by Bursa Malaysia, GAPKI, MPOC, MPOB and investment banks.

He is currently the Director and Principal Consultant of Ganling Sdn Bhd, a Malaysian-based company focusing on plantation research, consulting and investments.

GANLING specializes in weather-based palm oil forecasting, benchmarking and productivity improvement programs and performance analysis of plantation companies. Ganling is a consultant to a number of listed oil palm companies and banks in Malaysia and South East Asia and also an associate to LMC International, London, in the publication of: Oil Palm Quarterly Report – Indonesia and Malaysia.

Weather is one of the key drivers in the production and supply of almost of all oilseeds and palm oil and a major catalyst for price movement.

The 2015 El Nino is rated as one of the strongest events recorded in history. The 2015 ‘super El Nino’ severely affected palm oil growth and global production and resulted in a strong price rally in 2016 and 1Q17 (+66%).

The strong supply recovery (post El Nino – followed by two weak La Nina) in 2017 and 2018 triggered a price decline from 2Q17 onwards leading to the current bear cycle (- 44%).

We have been in this bear cycle for some 18 months or so now. Prices have started to rally sharply since November 2019 (+33%) on the back of potential supply deficit and increased demand from domestic biodiesel usage in Indonesia and Malaysia in 2020.

Are we still in the bear grip or the start of a new bull cycle? Is the recent sharp price rally sustainable?

This paper examines the changes in climate driver (ENSO) and the re-emergence a weak El Nino in 2019. Most climate models indicate that the El Nino has now entered the neutral ENSO phase with the possibility of moving into another El Nino toward the end of 2020.

How would the 2019 El Nino conditions affect production and supply of palm oil in 2020? What is the likely impact of an emergence/non emergence of another El Nino in 2020 on palm oil supply and prices? Will an upcoming El Nino provides further catalyst for upward movement of prices in the vegetable oil complex?

The full report will only be available from Feb 24, 2020 onwards.
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