Malaysian palm oil futures rise on yields report

Malaysian palm oil futures rise on yields report

Claire Leow, Bloomberg, Kuala Lumpur

Palm oil futures rose in Malaysia after a report showed yields
will decline next year in the country, the world's largest
supplier.

Average palm oil yields in Malaysia may decline to 4.11 tons a
hectare in 2006, from a projected record 4.19 tons this year, Oil
World said in an e-mailed report. Lower yields would come amid
Malaysian inventories that stood at 1.5 million tons on Oct. 31,
lower than some traders had been predicting, said oilseeds trader
Kwan Kim Kong.

"As demand has been strong, Malaysia's carry-over stock may be
less than expected although we had strong yields," said Kwan,
marketing manager for Asian Oils in Singapore.

Palm oil for January delivery rose 3 ringgit, or 0.2 percent,
to 1,430 ringgit (US$379) a ton on the Malaysia Derivatives
Exchange at 4:41 p.m. Kuala Lumpur time.

Palm and soybean oils are the world's two most consumed
vegetable oils. Malaysia and Indonesia account for 80 percent of
the world's palm oil production.

Malaysia's palm oil production will rise 3 percent to 15.6
million tons in 2006, slower than a projected 8.4 percent gain
this year to 15.14 million tons, Oil World said.

Oil World's 2005 forecast of 15.14 million tons is lower than
the government's projection that higher productivity and crop
yields will boost production to 15.3 million tons, according to a
Ministry of Finance forecast in September.

In a separate report, the Malaysian Palm Oil Board said today
that the country's crude palm oil output fell 2.2 percent in
October from the previous month, the first decline in four
months, prompting a 39 percent gain in imports of the commodity.

Malaysia produced 1.40 million tons of crude palm oil last
month, less than the 1.43 million ton in September. The nation
imported 44,000 tons in October, the second biggest shipment this
year, to fill export orders.