Drought greatest threat to RI's palm oil

Drought greatest threat to RI's palm oil

CHICAGO (Reuter): A searing drought that has fanned forest fires in Indonesia will do more damage to the region's palm oil crop than the heavy band of smoke that has engulfed the area, meteorologists and oilseed sources said.

"The smoke from the fires won't actually affect the crops, it's a temporary situation," said Mark Weidner, oilseed analyst with Cargill Investor Services.

"What I think it does show is how dry it is over there and that will affect next year's palm production," Weidner said.

Brunei, Singapore, Malaysia, the southern Philippines and parts of the Indonesian archipelago have been enveloped in smog caused by fires burning out of control in huge tracts of bush and forest in Sumatra and Kalimantan, the Indonesian part of the Borneo island.

The government in Malaysia's Sarawak state on Borneo ordered businesses, government offices and schools shut and advised people to stay indoors after the smoke pollution hit record danger levels.

The region engulfed in smoke is a leading world producer of oil palm, rubber, cocoa and timber, among other crops.

At least some of the fires have been set by plantation owners to clear land, officials in Malaysia said. But unusually dry weather resulting from the El Nino weather pattern has contributed to the problem, meteorologists said.

"The haze is a product of the dryness," said Peter Leavitt, president of Weather Services Corp. "The stable atmosphere has allowed for a considerable amount of bush fires, forest fires and the like."

"The dryness has strong implication for reduced palm oil production, but there is a long lag time between the meteorological event and the crop impact," Leavitt said.

Agronomists in Malaysia said they were not yet seeing any effects on the oil palm crops but if the haze lingers, it could slow the ripening process and trim production.

September usually marks the beginning of the rainy season in Malaysia. But this year, one of the strongest El Nino weather patterns this century has blocked the moisture, leaving crops in dire need of rain, Smith Barney meteorologist Jon Davis said.

"Usually what tends to happen is that they don't get a lot of precipitation during the summer months," Davis said.

"Then they just get bombarded in September and October," David said. "This year, it just literally hasn't rained yet. That is a very unusual situation and a very close correlation to El Nino.

"As long as the drought continues, the fires will continue," Davis said. "There isn't any indication of them getting into their normal type of rainfall pattern."

El Nino, a phenomenon of the southern Pacific Ocean, is marked by a warming of surface sea temperatures off the western coast of South America. That in turn has been tied to global weather effects, notably droughts in South Asia.

Meteorologists have called this year's El Nino the strongest seen since 1982-83, when resultant droughts and flooding in many countries caused billions of dollars in damage.