Oct. 2 (Bloomberg) -- PT Astra Agro Lestari, Indonesia's biggest publiclytraded agricultural company, said its palm oil production may increase byas much as a fifth next year, about the same as growth this year, becausemore trees will mature.

The Jakarta-based company may produce as much as 900,000 tons of theedible oil, the biggest rival to soybean oil, from an estimated 750,000tons this year, Astra Agro President Maruli Gultom, told reporters inPuncak, West Java province. Last year the company produced 633,425 tons ofpalm oil, the company said in a statement. This year's growth is estimatedat about 18 percent.

Astra Agro, the plantation unit of Indonesia's largest car distributor, PTAstra International, and rivals in Indonesia and Malaysia are boostingoutput and yields to make up for lower palm oil prices. Palm oil futuresin Malaysia, the world's biggest exporter, have fallen 16 percent thisyear as the U.S. soybean harvest is expected to increase by a fifth thisyear.

Astra Agro produces about 7.5 percent of Indonesia's palm oil. Indonesiais the world's largest palm oil supplier after Malaysia. Palm oil isprocessed into cooking oil and also used to make soaps, shampoo anddetergent.

The company is building more palm oil mills to process more of the oilpalm fruits, Gultom said. The company's new mill in Central Kalimantanprovince will be operational by the end of this year and is capable ofprocessing 80 fresh fruit bunches an hour, he said.

New Mills

The company is also building a new mill capable of processing 30 fruitbunches an hour in South Kalimantan and another one in Sulawesi. Both willstart operating by the end of next year, Gultom said.

To stem the impact of falling prices Astra Agro is also working to improvethe quality of its palm oil by speeding up the processing time, Gultomsaid. Speedier processing produces higher quality as the oil will havelower acid content.

In the eight months to Aug. 31, the production of its best quality palmoil, called the Super CPO, rose 31 percent to 293,192 tons, helping itachieve a 17 percent increase in the company's selling prices in theperiod.

Astra Agro, which had 206,100 hectares (509,284 acres) of land planted atthe end of last year, is Indonesia's largest plantation company after theSinar Mas group of companies. Astra Agro's profit rose 22 percent to arecord 280.66 billion rupiah last year. Sinar Mas manages about 300,000hectares of plantations in Indonesia.