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As El Niño approaches, plantation stocks rally, but is there any value left for retail investors?

The Edge Singapore
The Edge Singapore • 8 min read
As El Niño approaches, plantation stocks rally, but is there any value left for retail investors?
SINGAPORE (Apr 29); Before the welcome relief in the form of thunderstorms towards the end of April this year, the weather was hot and dry. Meteorologists appear to be forecasting more hot and dry weather for parts of the Indonesian archipelago in the com
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SINGAPORE (Apr 29); Before the welcome relief in the form of thunderstorms towards the end of April this year, the weather was hot and dry. Meteorologists appear to be forecasting more hot and dry weather for parts of the Indonesian archipelago in the coming months. That is not good for palm oil production as yields could suffer, according to the Malaysian Palm Oil Board (MPOB).

“As a tropical plant, the oil palm requires an evenly distributed annual rainfall of 1,500mm to 2,000mm or more without a defined dry season,” says a research paper, “The Impact of Climate Variability on the Palm Oil Industry”, by the MPOB.

The best fresh fruit bunch (FFB) yields, from which crude palm oil (CPO), is obtained, are in places with temperatures of 22°C to 29°C and around five hours of sunlight a day. Because of these requirements, the oil palm tree is cultivated only in tropical parts of Asia, Africa and South America.

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