This article first appeared in The Edge Financial Daily, on January 12, 2016.
Plantation sector
Maintain neutral: Malaysia will be hotter by up to 2°C in the first quarter of 2016 (1Q16) as the El Nino effect reaches its peak, meteorologists concluded after evaluating several global weather forecast models. Meteorological Department director-general Datuk Che Gayah Ismail said the sea surface temperature (SST) in the Pacific Ocean was rising, with the SST in the Nino 3.4 region at 2.7°C above average in the last week of last month.
Che Gayah said the hot and dry weather currently experienced in Kedah, Perlis and Penang will spread throughout the rest of the peninsula by the end of the month, and drag on until the end of March, as El Nino gains momentum. The same will happen in Sabah, and in the Limbang and Miri divisions of Sarawak.
Rainfall in Perlis, Penang, Kedah, Kelantan and Terengganu, northern Perak and northern Pahang is expected to be lower than the average level this month. Selangor, central and southern Perak, Negeri Sembilan and Melaka will receive rainfall slightly lower than the average level, while southern Pahang and Johor will receive an average level of rainfall. Perlis, Penang and Kedah will be drier than the other states.
In Sarawak, Sibu, Bintulu, Miri, Limbang and Kapit are expected to receive slightly lower rainfall than the average level, while other divisions will receive an average level of rainfall. Sabah will receive rainfall below the average level, except in the interior. Below-average rainfall could crimp palm oil supply.
The areas predicted to experience below-average rainfall in 1Q16 account for around 70% of the palm oil producing region in Malaysia. This could impact palm oil supply this year. Approximately eight to 20 weeks of lower-than-required rainfall could lead to multiple lagged effects on palm oil production in the form of bunch failure (four to six months later); floral abortion (10 to 12 months); and sex differentiation (22 to 24 months). — CIMB Research, Jan 10
