Floods may cut supplies of palm oil

Floods may cut supplies of palm oil

KUALA LUMPUR (Reuters): Palm oil output in Malaysia, the world's largest producer, is expected to fall sharply this month due to floods triggered by heavy monsoon rains, plantation sources said on Tuesday.

The northeast monsoon normally starts in mid-November and ends the following March.

The Meteorological Services Department said they expected the rains to ease in the next week.

"Basically, we do not expect continuous rains like what we saw lately. But some isolated or scattered showers will occur in the mainland over the next 10 days," said a spokesman.

David K.W. Khoo, marketing manager at K.L. Trading and Agency House Sdn Bhd said: "The palm flowers are just starting to come out now and rains keep pouring every day and this has damaged the crop.

"I feel that production in January will drop by 15 percent from December."

Private crop forecaster Ivan Wong estimates production in December fell by 12 percent to 645,000 tons from November.

The heavy rainfall has also caused secondary problems that would further reduce the January crop yield..

"The floods had also caused logistic problems. We are having transportation problems," another trader in a plantation said.

"Workers and lorries (trucks) have problems getting into the estates to collect fruits. This has caused delays in harvesting," he said.

States affected included Johore, the country's largest oil palm growing area.

Traders also said that the oil extraction rate (OER) would be reduced as ripe fruits had been left on the ground as the floods delayed collection.