El Niño raises drought risks for Indonesia’s palm oil sector

Indonesia’s Meteorology, Climatology and Geophysics Agency (BMKG) forecasts that most of the country’s key oil palm growing regions will experience low to moderate rainfall between August and October 2026. The outlook is largely driven by the ongoing El Niño weather pattern, which continues to suppress rainfall across many agricultural areas.

Indonesia accounts for around 57% of global palm oil production, making weather conditions a key factor for the international vegetable oils market. Oil palm productivity depends heavily on well-distributed rainfall and adequate soil moisture throughout the growing season.

According to BMKG, about 71.6% of Indonesia is expected to receive low rainfall in August, while dry conditions are forecast to intensify in September, affecting more than 77% of the country. Only a small share of the territory is expected to receive heavy rainfall. Conditions are projected to improve somewhat in October, although most palm-producing regions will still experience low to moderate precipitation.

In addition to reduced rainfall, BMKG expects precipitation across most of Indonesia to remain below the long-term average during the August-October period. Below-normal rainfall is forecast for about 86% of the country in August, nearly 88% in September, and more than 81% in October.

In response to the outlook, BMKG has urged plantation companies and smallholder farmers to strengthen drought preparedness by improving water management systems, conserving soil moisture, and closely monitoring weather conditions throughout the dry season. These measures are considered essential to limit production losses and maintain palm oil output through the end of 2026.