The most-severe drought in 17 years is threatening supplies of palm oil from Indonesia and Malaysia, the world’s biggest producers, and forecasters say an El Nino weather pattern this year may cause even more damage.
Palm oil will drop “significantly” in the fourth quarter as output from new trees in Indonesia, the biggest grower, surpasses estimates and buyers switch to soybean oil, DBS Vickers Securities (Singapore) Pte. said.
Wilmar International Ltd., the world’s biggest palm-oil processing company, fell the most in Singapore trading in more than three years after reporting quarterly profit that missed analysts’ estimates.
Palm-oil production in Malaysia, the second-biggest supplier after Indonesia, probably gained the most in seven months in April, after recovering from seasonally low-output months, according to a Bloomberg survey.