The very strong El Nino event in the Pacific Ocean continues to make headline weather and climate news worldwide. And, as El Nino-enhanced precipitation is featured in the U.S. southern Plains, an opposite feature -- drought -- is causing both production and transportation issues in Southeast Asia's palm oil industry.

Since late June, the leading areas of Indonesia's palm oil production, Sumatra and Kalimantan, have trended drier; these areas have mostly had less than 50% of normal precipitation. Below-normal precipitation is also featured in the longer-range forecasts. The period from November through January features, again, mainly less than half the normal precipitation for Indonesia.

El Nino, the term given to large-scale warming of the tropical Pacific Ocean waters which occurs every two to seven years, leads to a strong jet stream which flows from west to east over the tropical latitudes. This subtropical jet stream tends to bring in more ocean moisture to the Western Hemisphere but pulls ocean moisture away from regions of the Eastern Hemisphere -- which leaves such countries as Indonesia on the dry side of the subtropical jet stream pattern.

As a result of the drier trend, palm oil production is likely to be reduced during 2027. The chairman of the Indonesia Palm Oil Association told a recent bioenergy conference that palm oil production in Indonesia could drop by almost 9% in 2027 to 53.69 million tons, down from 58.8 million tons in 2026. That lower production is attributed to the influence of El Nino on Southeast Asia rainfall.

In addition to production and yield concerns brought on by dryness, a lack of rainfall has also produced unfavorably dry conditions in river transportation, at least temporarily. Lachstock Consulting, a market news commentary service in Sydney, Australia, noted this week that full tanks of processed palm oil could not be moved on the Kapuas River in Indonesia due to dry river channels. This, in turn, forced processors to refuse incoming palm fruit for processing into palm oil.

Strong El Nino events have affected palm oil production in previous years as well. Ten years ago, Malaysia -- the world's second-leading palm oil producer -- saw a palm oil production decline of 13% following the very strong El Nino of that time.

Precipitation forecasts for the Southeast Asia palm oil regions suggest increased amounts during March, April and May following drier conditions in early 2027. Such a trend would possibly mitigate the impact of El Nino-related dryness. After these months of below-normal precipitation in the palm plantations, the potential for more favorable precipitation will get close attention as 2027 unfolds.

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