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Section 1 : CPO Price Trend:
Weather – New Catalyst Impacting Palm Oil Price
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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. 
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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?
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Section 1 : CPO Price Trend |
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Archives |
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MITIGATING THE NEXT WAVE OF MARKET UNCERTAINTIES Nov 14, '22 ~ Nov 18, '22 |
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ASSESSING 2022: MANAGING OPPORTUNITIES AND RISKS Mar 28, '22 ~ Apr 01, '22 |
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Section 2: Opportunities for Palm Oil in Asian Market Oct 18, '21 ~ Oct 24, '21 |
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Section 1: Oils & Fats Supply, Demand and Outlook Oct 18, '21 ~ Oct 24, '21 |
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Section 1: Price Direction Apr 05, '21 ~ Apr 11, '21 |
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Section 2 : Special Focus on the US Apr 05, '21 ~ Apr 11, '21 |
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POINTERS ON THE PRICE TRENDS Jun 22, '20 ~ Jun 28, '20 |
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Section 1 : CPO Price Trend Feb 24, '20 ~ Mar 01, '20 |
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Section 2: Global Palm Oil Market Opportunities Feb 24, '20 ~ Mar 01, '20 |
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Section 2: Special Focus Aug 19, '19 ~ Aug 25, '19 |
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Section 1 : CPO Price Trend Aug 19, '19 ~ Aug 25, '19 |
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Special Focus - India Feb 25, '19 ~ Feb 24, '19 |
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Section 1: CPO Price Trend Feb 18, '19 ~ Feb 24, '19 |
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Section 2: Global Palm Oil Market Focus Aug 06, '18 ~ Aug 12, '18 |
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Section 1: CPO Price Trend Aug 06, '18 ~ Aug 12, '18 |
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Section 2 : Global Palm Oil Market Focus Jan 29, '18 ~ Feb 04, '18 |
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Section 1: CPO Price Trend Jan 29, '18 ~ Feb 04, '18 |
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Section 2: Regional Focus : CIS Countries Aug 21, '17 ~ Aug 27, '17 |
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Section 1: Palm Oil Price Fundamentals Aug 21, '17 ~ Aug 27, '17 |
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Section 2: Market Challenges and Opportunities Feb 20, '17 ~ Feb 26, '17 |
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Section 1: Price Directions Feb 20, '17 ~ Feb 26, '17 |
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Section 1 : Palm Oil Price Fundamentals Aug 22, '16 ~ Aug 28, '16 |
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Section 2 : Trade Issues and Market Prospects Aug 22, '16 ~ Aug 28, '16 |
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2016 Market Direction - Twists and Turns of Palm Oil Prices Feb 22, '16 ~ Feb 29, '16 |
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Second Half 2015 - Anticipating Market Price Direction Aug 17, '15 ~ Aug 23, '15 |
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Special Focus: Indian Sub-Continent Aug 17, '15 ~ Aug 23, '15 |
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Opportunities, Challenges And Trend In 2015 CPO Price Feb 23, '15 ~ Mar 01, '15 |
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2nd Half 2014: Market Challenges, Predictions And Directions Aug 25, '14 ~ Aug 31, '14 |
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Anticipating 2014 Palm Oil Price Direction Feb 17, '14 ~ Feb 24, '14 |
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Prospects For Second Half Of 2013 - Managing Price Fluctuations Jul 22, '13 ~ Jul 29, '13 |
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Mapping The Palm Oil Price - 2013 Market Perspective Feb 18, '13 ~ Feb 27, '13 |
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Palm Oil : Challenges, Opportunities And Latest Market Directions Aug 06, '12 ~ Aug 17, '12 |
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2012 Price Direction, Issues & Challenges Feb 13, '12 ~ Feb 20, '12 |
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Challenges, Opportunities And Latest Price Trend Aug 08, '11 ~ Aug 16, '11 |
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Challenges, Opportunities And Price Direction Feb 07, '11 ~ Feb 17, '11 |
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2010 Year End Prospects - What Lies Ahead? Aug 02, '10 ~ Aug 08, '10 |
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Historically, the El Nino-La Nina led average bull and bear cycle lasted about 4.2 years (50 months) - shortest is 3.3 years (40 months) and longest was 4.8 years (58 months).
4 years ago
1. El Nino or La Nina tends to develop during the period Apr-Jun and peak in Oct-Feb (following year). Late El Nino refers to onset during Sep-Dec period.
2.El Nino Southern Oscillation (ENSO) comprises of El Nino, Neutral and La Nina. The relative probability of El Nino is a composite of El Nino, Neutral and La Nina - add up to 100%. The relative probability of occurrence of each phase is calculated by climate scientists from the CPC for each forecast month. The official CPC probability forecast is a consensus of all the monitoring agencies.
3. Sorry, no layman's formula to guesstimate el Nino and la Nina occurrence probability.
4 years ago
1. Age profile of palm is one of the key determinants of yield level and therefore output. In weather-based crop forecasting, the age profile and planted area will determine the potential production before impact of weather. 2. Oil palm is a water loving plant and required adequate supply of moisture for optimum production. El Nino usually bring hot and prolonged dry weather/drought to South East Asia. Prolonged dry weather will reduce yield through bunch failure, floral abortion and prolonged male flowering phase. On the other hand, La Nina usually bring above average rainfall and therefore adequate supply of moisture for optimum palm growth and production. La Nina following El Nino enhances recovery of palm yield.
4 years ago
Not sure of your question - how weather pattern will change quarter by quarter in 2020. I presume you are referring to rainfall pattern. Rainfall are recorded and analysed daily, monthly or yearly - seldom quarterly. I am afraid I am not able to give you a definite answer. Different regions in Malaysia have different long-term average (LTA) monthly rainfall patterns. El Nino or La Nina can change/disrupt the normal LTA pattern. Should an El Nino is confirmed in the 2H 2020, it will most probably result in lower than average rainfall during the El Nino period.
4 years ago
Scientists working on a new forecasting model in Potsdam Institute indicated the return of El Nino in 2020 with an 80% probability. If the late El Nino is confirmed, the impact on production will most probably in 2021.
4 years ago