Benchmark palm oil futures on the Bursa Malaysia Derivatives Exchange fell to 3,740 ringgit ($843.29) a tonne on Wednesday afternoon.
“EL Niño is coming,” Mistry, the director of Indian consumer goods company Godrej International, said at an industry conference in Dubai.
Hot, dry weather as a result of the El Niño phenomenon will likely cut yields in main producers Indonesia and Malaysia and push up global prices of the edible oil.
The World Meteorological Organization last week forecast a 60% chance of the weather changing from the La Niña weather pattern to El Niño in May-July this year. That probability will increase to 70-80% between July and September, it said.
Mistry said that gives scope for palm oil prices to rise in the second half of 2023 unless there is a deep global recession and energy prices fall.
Another big factor to watch is the Black Sea export corridor between Russia and Ukraine, Mistry said.
If the Black Sea export corridor remains open, palm oil futures will struggle between 3,400 ringgit and 4,000 ringgit until a weather problem emerges, he said.
Mistry forecast top producer Indonesia’s production to rise by 1.5 million tonnes in 2023.
He pegged Malaysia’s 2023 production at 18.5 million tonnes, barely changed from 18.45 million tonnes last year.
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