10/04/2010 (Bloomberg) - Sime Darby Bhd., the world’s biggest listed palm oil producer, will start focusing on its Malaysian plantations to improve yields, seeking to emulate successes achieved in neighboring Indonesia, Chairman Musa Hitam said.

“The yields in Indonesia since we took over have improved tremendously. We’re taking Malaysia for granted,” Musa, 75, said in an interview in Brussels yesterday. “Just last week we had a retreat, bouncing ideas. Now I said I would like to see a special exercise in Malaysia.”

Sime Darby, based in Kuala Lumpur, increased production of crude palm oil by almost 11 percent in the six months through December as extraction rates rose and fresh fruit bunch yields in Indonesia jumped 27 percent to 10.5 tons per hectare. Yields at its Malaysian plantations, which account for 65 percent to 70 percent of annual production, fell to 12.1 tons per hectare from 12.4 tons in the same period a year earlier.

Output in the fiscal year that ends on June 30 may fall by between 5 percent and 7 percent short of the 2.4 million-ton forecast because of drier-than-usual weather conditions, Azhar Abdul Hamid, managing director of Sime Darby’s plantation division, said in an interview last month. Malaysia has forecast palm oil production may drop as much as 3 percent this year as the weather phenomenon El Nino, caused by a warming of the equatorial Pacific, brings reduced rainfall or drought to Asia.

Palm oil for June delivery climbed 3.8 percent to 2,594 ringgit ($813) a metric ton on the Malaysia Derivatives Exchange yesterday, the biggest one-day advance in more than six months. The tropical commodity has averaged 2,567 ringgit so far this year, a 32 percent increase from the same period in 2009.

“Overall, our profit is good and the price of palm oil is high,” Musa said. “We’re talking about 2,500 ringgit, it’s OK, we’re not unhappy about it.”