02/12/2007 (The China Post), Indonesia - PT Astra Agro Lestari, Indonesia's biggest agricultural company by market value, raised its palm oil production forecast for this year by 6 percent to more than 900,000 metric tons as rains benefited crops.

The company had cut its target for crude palm oil output this year to about 850,000 tons on Sept. 26 from an original target of 920,000 tons, citing tree stress from last year's drought. Production usually picks up in the second half.

"There is sufficient rainfall, and the key to our success is in the fourth quarter,"Tjahjo Dwi Ariantono, a company spokesman, said in a phone interview from Jakarta today. "Now it seems we shall exceed 900,000 tons this year."

Indonesia, the world's largest producer of palm oil, and Malaysia, the next largest producer, suffered from drought last year although both still had record production of about 15.9 million tons each. The two Southeast Asian nations account for about 90 percent of global output.

Palm oil has rallied 47 percent this year on demand for use in cooking, soaps and as a fuel substitute. The commodity rose to a record 3,068 ringgit ($914) a ton on Nov. 26 on concern drought may have limited capacity to meet the increased demand.

Palm oil for delivery in February on the Malaysia Derivatives Exchange traded at 2,899 ringgit a ton at the 12:30 p.m. local time end of morning trading.

Picking Up
Astra Agro produced a record 917,885 tons of palm oil in 2007, helping the stock gain 181 percent in dollar terms last year, the fourth best performer on the Jakarta LQ45 index of the 45 most widely held stocks.

The stock has more than doubled since the start of this year to 26,550 rupiah on the Jakarta Stock Exchange.

Astra Agro's October production was 88,343 tons, a 12 percent increase over September as rains brought relief, data on the company's website shows.

"October was a good performance and November a little bit better, and that is significant," Ariantono said. Astra Agro will release its official November production data next week.

The company, which will have 230,000 hectares (568,000 acres) of oil palms by the end of this year, will add between 20,000 and 30,000 hectares next year, Ariantono said. Oil palms mature in about four years.

"We could do better in 2008 than in 2007," Ariantono said of next year's production outlook, citing better weather. -Bloomberg-