Oilworld - World palm oil production is forecast to rise steeply by2.8-2.9 Mn T in Oct/Sept 2004/05, significantly abovethe average annual growth of 1.6 Mn T in the latest 10 seasons. The largeincrease this season follows a rise by 2.0 Mn T in 2003/04. Both were dueto a slight acceleration in the growth of the mature area in key countriesbut primarily to above-average yields.

In Malaysia the productivity of palm trees has been exceptional so farthis season, resulting in a total palm oil production of 8.6 Mn T inOct/April 2004/05, up 1.5 Mn T on the year. A setback in yields will beunavoidable in the near to medium term and we expect this to curb theproduction growth in Malaysia to 0.2 Mn T in May/Sept 2005.

World palm oil exports increased by an average 1.3 Mn T per year in thelast 10 years. This season’s increase reached already 1.2 Mn T in thefirst half of the season and may approach 2.1 Mn T in the full season.

Exports are seen reaching 25.5 Mn T in 2004/05, nearly 60% of world tradein 8 major oils. Exports from Malaysia are forecast to rise by 1.5 Mn Tand those from Indonesia by 0.5 Mn T.

Global demand for palm oil is forecast to rise steeply by 2.7 Mn T thisseason. This includes an increase of 0.6 Mn T in the EU-25, partly due tobiofuel production.

Still, palm oil stocks are on the rise and have been significantly higherthan in preceding years since mid- 2004. However, the increase in thestocks/usage ratio relative to previous years is less pronounced. But theyear-on-year growth will narrow in May/Sept 2005, as the growth inproduction will slow notably.