https://www.dpa-international.com/trends-and-features/urn:newsml:dpa.com:20090101:260822-99-407999/
https://finance.yahoo.com/markets/commodities/articles/severe-el-ni-o-set-113325793.html
This year’s El Niño is set to be the strongest “in living memory,” according to the UK Meteorological Office, which on August 21 warned that the Pacific Ocean warming and wind phenomenon means Europe could be in for a stormy winter and record-breaking heat next summer.
But what the Met Office described as an “unprecedented” El Niño will not just affect the weather in Europe: it is set to help push up the price of palm oil, meaning extra costs for shoppers given the widespread use of the versatile but controversial commodity in cosmetics, detergents, soaps, toothpaste, baked goods, margarine, chocolate and more.
On August 20, BMI and Fitch Solutions forecast a reduction in global palm oil production this year, but at the same time said demand could rise by almost 3%, in turn forcing prices up.
Around 90% of the world’s palm oil is sourced from Indonesia and Malaysia, described by BMI and Fitch as “two highly weather-sensitive producers.” Given El Niño’s “association” with below-average rainfall, “monsoon-dependent” Southeast Asia’s agriculture is among the most exposed, BMI and Fitch explained.
Indonesia’s massive domestic consumption of palm oil is set to increase as it turns to the crop to make biodiesel. But as global demand increases, the reduced supply for export will make palm oil more expensive.
A “severe” El Niño also poses a “direct risk” to farm production elsewhere in Asia and in Australia, according to BMI and Fitch, which said the weather flux will affect parts of Africa such as Côte d’Ivoire, one of the world’s main cocoa sources.
BMI and Fitch previously pointed out that palm oil and cocoa are the two commodities “most exposed” to disruption caused by El Nino – meaning more expensive treats are on the cards given that palm oil and cocoa are used in chocolate and in some ice cream.
Palm oil has long been a target for environmentalists due to it sometimes being grown on razed jungle land – clearances sometimes carried out by fires that in turn cause air pollution and haze across Southeast Asia.. But proponents point out that it requires far less land than other vegetable oils, typically yielding 4 times the oil for the same compared to crops such as rapeseed.
Often lasting around a year, El Niño occurs about every two to seven years, and is “characterized by unusually warm ocean temperatures in the Equatorial Pacific,” according to the U.S. National Oceanic and Atmospheric Administration. Winds usually blowing from east to west across the vast ocean weaken or sometimes reverse, with heat released from the ocean into the atmosphere.
In between El Niños, an opposing phenomenon called La Niña can take place, bringing colder weather and stronger winds. The most recent La Niña ended earlier this year, giving way to this latest stronger-than-usual El Niño.
