Kuala Lumpur: Take almost any package off a supermarket shelf and there’s a good chance a weevil helped make what’s inside. That’s because the African oil palm weevil is a key pollinator of the fruit that yields palm oil, an ingredient in everything from chocolate to pizza as well as shampoo and lipstick.
But the little bugs are having a harder time doing their jobs in Malaysia, the world’s second-largest producer of palm oil. Farmers rely on moist tropical conditions to keep the weevils sticky enough to move pollen. This year, El Nino weather patterns have made it unusually dry, threatening future harvests and sparking a jump in prices since August.
Plantations are already suffering from the strongest El Nino in almost 20 years, with rainfall forecast to be below average to March. It is also is exacerbating haze blown from forest fires in Indonesia, threatening to stifle plant growth. While a seasonal lift in production has left record palm-oil inventories in Malaysia, producers say parched weevils may limit supplies.
“If there are no weevils, then pollination will depend on the wind and it’ll be a very poor crop," said Purushothaman Kumaran, the Sabah-based chief financial officer at IJM Plantations Bhd. “The weevils are residents on the palm trees. They sit on the male flowers, then carry the pollen and fly onto the female flowers and pollinate them."
Palm is the world’s most-used cooking oil and is in more than half of all packaged products consumed in America, according to the World Wildlife Fund. To meet rising demand, global palm-oil producers boosted output to a record 65.2 million metric tons from 10.85 million in 1990, US Department of Agriculture data show.
Part of that increase was because of the weevil. The insect known as Elaeidobius kamerunicus was introduced to Malaysia in the 1980s to increase output in a country that now produces about 20 million tons, or about a third of the world’s palm oil. The bugs helped boost yields at Malaysian plantations as much as 43% to 20 metric tons of fresh fruit bunches per hectare, up from 14 tons to 15 tons when plants were pollinated by wind, according to Purushothaman.
The insects transfer pollen from male to female flowers, carrying as many as 2,000 grains stuck to their bodies and legs, according to Norman Kamarudin, director of the Biological Research Division at the Malaysian Palm Oil Board. While other insects also help the process, they are less efficient and not specific to oil palms, he said.
“For the pollen to stick to the grooves of the weevil’s body, it needs to be moist," said Makhdzir Mardan, chief executive of the Malaysian Palm Oil Association. Palm plantations are typically humid due to their closed canopies, so “if the weather becomes dry, it will affect pollination efficacy," he said.
Prices have surged 25% from a six-year low in late August, including a September rally that was the biggest monthly gain since 2009. Futures traded at 2,320 ringgit ($538) a metric ton on the Bursa Malaysia Derivatives on Friday.
Before the concern over dry weather emerged in August, palm oil was down 12% in 2015 as inventories rose. It’s now up 1.8% for the year, bucking a global rout in commodities.
The bust-to-boom rally for palm oil is largely down to El Nino. The event is the strongest since 1997-98 and US forecasters predict it could be one of the most severe since record-keeping began in 1950. Some areas in Malaysia may receive rainfall that’s as much as 60% below average in January and February, according to the Malaysian Meteorological Department. In Indonesia, the world’s biggest palm oil producer, below-normal rain is forecast this month in southern Sumatra, south and east part of Kalimantan on Borneo and most of Java island, according to Indonesia’s Meteorology, Climatology and Geophysics Agency.
El Nino’s unprecedented impact on supply and an increasing global reliance on palm oil will drive prices higher through 2016 , RHB Research Institute Sdn. said last month. The extreme weather may curb plant productivity by about 10% in the first half of next year, according to Nirgunan Tiruchelvam, director of research at Religare Capital Markets in Singapore.
Parched weevils won’t help
“Without weevils, you wouldn’t see any fruits," said Ong Keng Wee, associate director of equity research at Affin Hwang Investment Bank Bhd. “If there’s pollination but no water, the fruits cannot develop." Bloomberg