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.