17/05/2012 (Bernama) - A severe structural slowdown in crude palm oil (CPO) output is under way and the downtrend is expected to worsen over coming seasons, says Standard Chartered.

The deceleration in palm output is caused largely by the ageing profile of estates in South East Asia, which accounts for over 90 per cent of the market, as well as sub-optimal farming practices across much of the region.

In a global research report titled, "Crude palm oil - A price storm is brewing", the bank said:"Our conservative estimate is that more than 20 per cent of trees in Malaysia are over 20 years-old. In reality, it could be more.

"US prospective planting for 2012 also suggest soybean output will remain tight for the rest of the year.

"The resulting decline in palm yield, alongside a production shortfall in the soy complex, will necessitate strict demand rationing in the edible oil sector."