Agri Picks Forecast Geojit, September 29, 2023

 Agri Picks Forecast Geojit, September 29, 2023

The Indonesian Palm Oil Association (GAPKI) warned on Thursday that El Nino weather patterns are anticipated to restrict output in top producer Indonesia, and as a result, crude palm oil (CPO) prices in 2024 are likely to average at least 11% higher than this year.

Agri Picks report by Geojit

The Indonesian Palm Oil Association (GAPKI) warned on Thursday that prices for crude palm oil (CPO) in 2024 are likely to be at least 11% higher than they were this year since El Nino weather patterns are anticipated to restrict output in top producer Indonesia. According to Fadhil Hasan, the association's head of foreign affairs section, typical CPO pricing, including cost, freight, and insurance (CIF Rotterdam), may increase to $1,000 per metric ton in 2024 from about $900 in the current year. 

He told reporters outside of a conference that the price of vegetable oils, including palm oil, would be supported by reduced supplies of palm oil and competitive oils like sunflower oil, both of which have been negatively impacted by the conflict between Russia and Ukraine. Palm oil competes with soy oil, sunflower oil, and rapeseed-canola oil, which are mostly produced by Argentina, Brazil, Russia, Ukraine, and Canada. These oils are used in everything from cakes to shampoo to cleaning goods. According to Hasan, Indonesia's CPO production, which was 46.7 million tons last year, could increase by about 1 million tons in 2023. The intensity of the El Nino weather trend will decide how much the production declines in 2024, he said. El Nino's effects are already apparent. 

The weather is quite dry and temperatures have risen. The full effects of this weather on palm productivity would be evident the following year, he said. When the Pacific Ocean warms, it causes drier weather over Asia, which reduces the yield of some crops like rice, wheat, and oil palm. Despite the fact that El Nino is decreasing rainfall in Indonesia, Malaysia, the world's second-largest producer, is less affected and, according to a Malaysian official, output there is anticipated to increase next year. Data from the Department of Agriculture and Farmers Welfare show that as of Friday, 110.3 million hectares (mln ha) of the country's land area were planted with kharif crops for the 2023–24 (Jul–Jun) season, up from 110.0 million hectares (mln ha) a year earlier.

 Paddy, the main grain of the kharif season, with an increase in acreage of 2.7% year over year to 41.2 million ha. As a result of extensive rain in recent weeks, paddy seeding has accelerated. After insufficient monsoon rains in August, central and southern peninsular India has experienced ample rainfall since the beginning of September. According to forecasts from the weather service, rainfall in September will be normal, between 91 and 109% of the long-period average, with normal to above-normal precipitation over parts of east and northeast India, the east-central region, and the south peninsula. The data showed that 18.6 million ha were planted with coarse grains, a small increase from 18.4 million ha a year earlier. 

Oilseed acreage decreased 2% to 19.3 million ha, while pulse acreage decreased 5% to 12.3 million ha. Pulse planting has suffered this season as a result of farmers switching to more lucrative crops like soybean and small millets due to irregular rainfall in important growing zones. According to the data, the country's soybean acreage was 1% more today than it was a year ago. At 12.3 million acres, the area planted with cotton was down 3%. The report also showed that sugarcane acreage was 8% greater as of today, at about 6 million acres.

 There have been worries that India's sugarcane production could be affected the next season, which would result in a scarcity of sugar. The administration has still reaffirmed that there is enough sugar in the country's reserves to meet domestic demand for more than three months. According to the government, the nation had 8.3 million tn of sugar in stock as of August 31. The Indian Sugar Mills Association estimated the nation's net sugar output for 2023–24 (October–September) at 31.7 mln tn on August 2, down 3.4% from 32.8 mln tn in the current season. As of today, sunflower seeding in the current kharif season was behind astronomically by 65% from the previous year.

 According to data from the India Meteorological Department, major sunflower-growing regions like Maharashtra and Karnataka have gotten insufficient precipitation so far this monsoon season. The crop's sowing has suffered greatly as a result of this.

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