KUALA LUMPUR (June 17 2003) : Indonesia's crude palm oil production couldtouch nearly 10 million tonnes this year, up nine percent from last yearbecause of higher yields, an Indonesian industry official said on Monday.

But exports from the world's second largest producer after Malaysia werealso expected to rise this year in line with an annual increase in globaledible oils consumption, said Tan Saiwai Lingo, vice president director ofPT Smart TDK.

"If the weather is good, (output) can reach 9.8 million tonnes. Weproduced around nine million tonnes last year," Tan told Reuters on thesidelines of a planter's conference in the Malaysian capital.

"Productivity is higher, but there is only a small increase in plantedareas. Exports will be close to six million tonnes compared with 5.4million tonnes last year," said Tan.

Traders said palm oil's productivity in Indonesia has increased slightlyto 3.55 tonnes a hectare this year compared with 3.50 tonnes last year.

Planted areas stood at 3.33 million hectares (8.33 million acres) thisyear against 3.2 million hectares in 2002, they said. Indonesia, whichsells palm oil mainly to India, China and Europe, is eager to boostexports because its domestic consumption is stagnant at 3.5 million tonnesa year.

Archival Malaysia is expected to produce 12 million tonnes of crude palmoil in 2003, up from 11.91 million tonnes in 2002.

It exported 10.8 million tonnes last year, up 2.5 percent from 2001.

Tan said Indonesia could rely on a steady increase in global consumptionto improve exports. "Global consumption is always on the rise, at least bythree to four percent a year.

This means three to four million tonnes edible oils are needed each year,"he said.

Tan said Indonesia was expected to export as much as one million tonnes ofpalm oil to China, which this year raised its palm oil import quotas to2.5 million tonnes from 2.4 million tonnes last year.

Traders said Indonesia exported around 900,000 tonnes of palm oil to Chinalast year.-Reuters