Sipef has become the second plantations group in two days to highlight potential damage from El Nino, warning that the destructive weather pattern could disrupt an improvement in palm oil output.

The Belgium-based bananas-to-tea group said that an El Nino looked the main threat to palm operations which had, in the first six months of the year, raised oil production by 13.4% to 158,000 tonnes, helped by "excellent climatologic conditions" in parts of Indonesia.

"Only local weather effects remain the uncertain factor that could disturb our expectations for the remainder of the year, as the impact of El Nino might rather affect the 2010 crops," Sipef said.

The comments come a day after a warning by REA Holdings of potential El Nino damage helped send its shares down by 6%.

Sipef stock closed 3.5% higher at E35.04 in Brussels.

Tea refreshes

The improved palm production helped limit to 19.6% the decline, to E32.4m, in group earnings for the first half despite a 44% slump in average Rotterdam palm oil prices.

Profits from rubber were also undermined by lower prices, sliding 42% to E4.57m.

However, a surge in tea prices, which hit a record high on Wednesday for a second successive week, helped Sipef's tea profits more than double to E1.32m.

"The adverse weather, mainly in Kenya, that sharply reduced the availability of good quality teas still influences positively world tea prices," Sipef said.