MALAYSIA'S crude palm oil (CPO) production this year is forecast to rangebetween 13.5 million and 13.6 million tonnes, almost similar or slightlyabove last year's output of 13.4 million tonnes, said PlantationIndustries and Commodities Minister Datuk Peter Chin.

We believe this projected production figure will continue to support firmCPO prices going forward, he told a press conference in Kuala Lumpuryesterday to mark his 100th day in office.

Malaysian Palm Oil Board director-general Tan Sri Yusof Basiron, however,cautioned that palm oil production this year could stagnate or evenregister slower growth due to down-cycle in the palm trees' biologicalyield and wet weather.

This could be supportive of CPO prices, he said, adding that demand forpalm oil was expected to continue increasing due to the growing worldpopulation and greater awareness that palm oil could be used in both foodand non-food-based industries.

OilWorld had indicated that palm oil supplies would be tighter this yearwith global output expected to grow only 3% year-on -year after a 10% jumplast year.

Its forecast for next year, however, is for a 7% jump in output, driven bya recovery in Malaysia's CPO production.

Malaysian Palm Oil Association chief executive M.R. Chandran, meanwhile,has indicated that the price of CPO still has potential to rise further inview of anticipated production shortfalls in major producers Malaysia andIndonesia amid continued demand for the commodity.

I believe there is room for further increases. Everything will depend onthe production situation and the South American soya bean harvest.

Malaysia's CPO production in the first six months of this year was lowerthan in the corresponding period last year. Indonesia, which is expectedto produce 11 million to 11.2 million tonnes annually, will probablyproduce only 10.5 million tonnes this year.

Chin said his ministry would be comfortable if the CPO was traded atbetween RM1,400 and RM1,600 per tonne for the rest of the year.

I believe our palm oil producers can still maintain reasonable profitmargins based on these prices, he added.

Yesterday, the CPO price for July South rose to RM1,435 per tonne fromRM1,420 on Tuesday.

In outlining his ministry's new direction going forward, Chin said theplantation sector should strive for higher efficiency and productivitythrough improved skills and management, better machinery and equipment, aswell as better quality seedlings and trees.

He said there was a need to set up more training institutions to ensureMalaysia would have a larger pool of skilled managers and supervisors inthe plantation sector.

He also hoped to see more value adding through research and development,greater efforts towards improving product quality, strengthening ofexisting markets and penetration of new markets.

In addition, he said, Malaysia should go into new areas of growth such asbiomass and mono-crop farming