- Last week, Bloomberg quoted an Australian weather agency as saying that El Nino may develop by 3Q2014.

- Australia’s Bureau of Meteorology said that El Nino may occur in the coming months as the Pacific Ocean warms.

- Some weather models predicted that the warming may approach El Nino thresholds by early-winter (June to August) in the Southern Hemisphere.

- Currently, conditions are neutral and the next weather update is on 11 February 2014.

- In contrast in early-January 2014, the Climate Prediction Center in the US said that El Nino neutral conditions are expected to continue until the summer season (June to August) in the Northern Hemisphere.

- We believe that weather patterns are difficult to forecast. In addition, confirmation of El Nino will only be known in 3Q2014.

- Prolonged dry conditions would affect the FFB yields of oil palm trees. Immediate impact is the delayed ripening of palm fruits.

- In addition, there will also be lagged impact six months later, 12 months later and 24 months later.

- In another development, independent cargo surveyors reported that palm oil shipments from Malaysia declined by 10.8% to 11% in January 2014 compared with December 2013.

- SGS reported that palm oil exports from Malaysia to European Union declined by 13.1% while India received 46.6% fewer shipments.

- Palm oil shipments to China fell 13.8% MoM in January 2014. Silver lining is that USA bought 34.9% more palm oil in January compared with the previous month. 

Source: AmeSecurities