18/12/2007 (The Economic Times), Kuala Lumpur - Malaysia's palm oil output is likely to fall 18 percent this month from November, as floods and heavy rains have inundated plantations is key producing states, industry officials and producers said on Tuesday.

Floods and monsoon rains over the past week have cut off roads leading to palm estates in several states, including Kelantan and Terengganu in the east and Johor in the south, making it difficult to harvest palm fruits and transport them to the mills.

"I think December production is going to be down. At this stage it is difficult to say how much but the estimate for 2007 production is 15.5 to 15.7 million tonnes," Sabri Ahmad, chairman of Malaysian Palm Oil Board, told Reuters. M. R. Chandran, an independent industry analyst and a former head of Malaysian Palm Oil Association, estimated palm oil output this month to fall 18 percent from November.

"Pahang is bad, Johor is also very bad and some parts of Sarawak have also been affected now," Sabri said. "Harvests will definitely be affected as there will be fruit bunches getting rotten." Malaysian crude palm oil futures eased 0.7 percent by midday on Tuesday as players booked profits and crude oil slipped. But the contract had strengthened by 1.5 percent on Monday to finish at 2,975 ringgit a tonne, boosted by robust demand amid worries that rain and floods had affected harvest and transport activities.

Palm planters in flood-hit areas said their output is likely to decline 20 to 30 percent this month. "Fruits can not be taken out from the estates and as a result we cannot run the mills," said Kelvin Tan, general manager of Prosper Group, which owns 40,000 acres (16,000 hectares) of palm plantations in central Pahang state.

"When the rains stop, the fruits that will be coming to the market will be over-ripe and some may even be rotten." Tan said the company's palm oil output in the first half of December fell 30 percent from November.

Another palm planter, who owns estates in Johor in the south and Sabah on the Borneo island said his output was down 20 percent. Malaysian Meteorological Department has issued a forecast of moderate to heavy rains over the next two days in Johor, Kelantan, Terengganu and Sarawak states, news agency Bernama reported on Tuesday.