06/11/2017 (Platts) - Palm oil traders and speakers attending the Indonesian Palm Oil Conference in Bali over November 1-3 were concerned about low yields from palm oil trees in 2017 -- a year following the El Nino of 2016 -- and the moratorium on palm oil plantation expansions.

Crude palm oil production in years that follow an El Nino year generally witness an exponential growth, however, 2017 has been an exception to that rule, with production volumes from both Indonesia and Malaysia disappointing to the downside.

Malaysian palm oil inventories rose above 2 million mt in September to 2,019,018 mt, according to Malaysian Palm Oil Board data, but this was because of lower export demand and restocking amid expectations that demand will increase to destination markets such as India, China and Pakistan.

This year, CPO production despite being at the high end of its cycle has not shown its expected or predicted potential. Analysts said that palm oil trees were still in their resting phase after the El Nino.

Another facet of palm oil production that was worrying to the industry was that there was very little additional acreage available for palm oil plantations in both Indonesia and Malaysia, attendees at the conference said.

Malaysia has already reached a limit on the area available for palm oil cultivation, while the Indonesian government has imposed a moratorium on land availability for further plantations, industry sources at the conference said. Expansion across Indonesian plantations have slowed to 150,000 hectares per year, from 500,000 hectares per year, Singapore-based Dorab Mistry of Indian conglomerate Godrej International said.

An Indonesian plantation owner who attended the conference said that because of the limited land available for plantation expansions, he was focusing on replanting his existing plantation land with new high yielding seeds -- which could increase his palm yield to as high as 7 mt per hectare.