17/2/07 ( Bloomberg) -  INDONESIAN palm oil output will increase less than expected as the El Nino weather phenomenon-induced drought will cut output in southern Sumatra, Lampung and southern Kalimantan, a palm oil producer said.

Indonesia probably produced 14 million tonnes of the commodity in 2006, or 7 to 8 per cent less than expected, said Jo Daud Dharsono, vice president-director of PT Sinar Mas Agro Resources and Technology Tbk. This year, Indonesia may produce less than 15 million tonnes, he said.

"Drought will cause a water deficit in plantation areas in South Sumatra, South Kalimantan, and Lampung," he said in a phone interview from Jakarta. "On the other hand, more plantations mature so that decline will be offset by higher output from the other areas."

The Indonesian Palm Oil Association forecast last month that production would be 16.4 million tons in 2007. - Bloomberg