-  Bloomberg quoted two weather forecasters as saying that El Nino this year may be weak, potentially reducing its impact, which typically brings drought to Asia and rains to South America.

-  Commodity Weather Group LLC said that the chance of a weak pattern is 65% and odds of a moderate one are 35%. According to AccuWeather Inc, the probability of a weak event is 80%. The expert said that El Nino will probably set in July and last between six and eight months,

-  Another weather forecaster said that a weak event is likely as the trade winds have not weakened significantly.

-  Yesterday, Australia’s Bureau of Meteorology said that just over half of its climate models suggested that El Nino will establish by August 2014.

-  The bureau said that although sea surface temperatures have risen, atmospheric indicators such as the southern oscillation index and trade winds have only shown a weak response.

-  These developments come as CPO prices fell below RM2,400/tonne yesterday. We reckon that CPO prices have been languishing on concerns over rising inventory levels.

-  Palm oil production in Indonesia has been growing in recent months, as reflected in the output numbers of some of the listed companies.

-  Astra Agro Lestari’s FFB production climbed 9.6% YoY in the four months of the year while BW Plantation’s FFB output rose 8.5% YoY in 1QFY14.

-  Bumitama Agri Ltd’s FFB production surged 24.2% YoY in 1QFY14 while First Resources’ FFB output improved 11.3% YoY during the January to April 2014 period.

-  An industry player in Malaysia expects its palm oil production remain flat MoM in July to due to the Ramadan festivities.

-  Thereafter, palm oil output is envisaged to rise from August onwards to peak in October. -  Lagged impact from the dry weather, which took place early this year, is expected to take place only by year-end. 

Source: AmeSecurities