20/07/2011 (Bloomberg) - Vegetable oil production may gain 4 percent in 2011 following a larger increase last year as higher yields in Malaysia and Indonesia boost palm-oil output, Hamburg- based researcher Oil World said in a report today.

World production of palm, soy, cotton, groundnut, sun, rape, palmkernel and coconut oils will rise to 145.7 million metric tons this year, Oil World said. Palm oil production will rise 8.5 percent to 49.8 million tons, according to the report. Soy oil output will gain 5.2 percent to 42.3 million tons, the researcher said.

“Palm oil production is set to continue to rise sizably from a year earlier during the remainder of this year,” Oil World said. “World production has recovered sizably since March 2011, mainly in Malaysia and Indonesia, with yields per tree showing a clear-cut improvement after two years of below-average productivity.”

Palm oil futures have lost 18 percent this year on prospects for bigger inventories as better weather resulted in higher output from Indonesia and Malaysia, the biggest producers.

Malaysia will produce 18.6 million tons of palm oil in 2011, up 16 percent from a three-year low last year, Oil World said. Indonesia’s output this year will rise 8.1 percent to 24 million tons, according to the report.

Palm oil production in the second half of the year will total 26.8 million tons, up 2.2 million tons from last year, Oil World said. Malaysian output will gain 9 percent from the second half of last year to 10 million tons and Indonesian production will rise 7.2 percent to 13.3 million tons, according to the report.

“While yields reportedly recovered pronouncedly in the first half of 2011, shortage of labor remains a constraint in Malaysia where the industry is trying to convince the government to apply a more liberal immigration policy to improve the labor situation and make it possible for the plantations to minimize losses and raise the oil extraction rates,” Oil World said.