06/03/2009 (Business Times, Malaysia) - INDONESIA and Malaysia, the world’s top palm producers, will see only a small rise in output this year due to tree stress after months of good harvests and less fertiliser usage, a top industry analyst said yesterday.

Indonesian output of the tropical oil was expected to rise 7.9 per cent to 20.6 million tonnes while Malaysian production was seen rising slightly to 17.9-18 million tonnes, said Thomas Mielke, head of German oilseeds research group Oil World.

The Malaysian forecast is higher than the 17.6 million tonnes Mielke forecast in November, and up from the 17.7 million tonnes produced in 2008.

“(Malaysian output is) up only slightly due to expectations of a decline in yields after the very high production in the second half of 2007, the first 9-10 months of 2008,” Mielke told Reuters from the German city of Hamburg ahead of the Bursa Malaysia Palm Oil Conference next week.
 
“The trees are undergoing stress and the yields are declining, which will go on well into 2009. Slowing production is also supported in a few cases by less fertiliser application.”

Although the European Union has under environmental pressure backed down from a 10 per cent target for biofuels to be used for road transport, Mielke said German power producers were buying more palm oil to burn for electricity generation.

“Germany will buy 400,000-500,000 tonnes in the 2008/2009 season to burn palm oil for electricity generation,” he said.

“No exact numbers but it will be much higher demand because palm oil prices have fallen. Last season, there was not much because prices were so high.” - Reuters