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Tuesday, August 14, 2001

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Rains likely to help expand Malaysian oil palm yield

Our Bureau

MUMBAI, Aug. 14

EVEN as Malaysia's oil palm area expansion slows, continuing rainfall at higher-than-normal rates is expected to promote high palm oil yield. Over the last few weeks, slowing palm oil production, larger exports and less-than-anticipated stocks have pushe d the palm oil market on a high trajectory. Will August or September see a reversal of slowing palm oil production?

Monthly average rainfall, weighted by region for palm oil area, has been above normal for nine of the last 10 quarters, with the third quarter of 2000 (July-September) missing normal by just 4 millimeters. Excessive monthly average rainfall of over 300 m m from November 2000 to January 2001 may have decreased pollination and may have resulted in reduced yields six months later (May-July).

Yields are expected to pick up in August or September, benefiting from the good rainfall levels of the past 10 quarters, according to a report of the US Department of Agriculture (USDA). A linear regression model using the precipitation data projects Mal aysian palm oil yields of 4.22 tonnes per hectare for 2000-01 (October-September) and 3.88 tonnes per hectare for 2001-02.

Harvested area for palm oil, estimated at 2.94 million hectares for 2000-01 and 3.31 mha for 2001-02, implies production levels from the regression model are 12.5 mt for 2000-01 and 13.1 mt for 2001-02, the report said adding that with actual production data now available for the first three quarters of 2000-01, only the last quarter estimate is projected.

Low crude palm oil prices and a government programme that has subsidised the replanting of approximately two lakh hectares of old palm stands have slowed the growth of palm area after years of rapid expansion. Mature oil palm area in 2000, estimated by t he Malaysian Palm Oil Board, is 2.94 mha, just 85,000 hectares greater than in 1999.

Mature area increased by 2.6 lakh hectares in 1999, and has increased by an average of 1.2 lakh hectares over the last ten years. A flattening of the palm area is occurring in Peninsular Malaysia, while expansion is continuing in Eastern Malaysia, the re port pointed out.

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