By Berni Moestafa
Nov. 13 (Bloomberg) -- Palm oil output in Indonesia and Malaysia, the two biggest producers, may drop next year as oil palm yields decline, helping bolster prices that have plunged this year, according to Rabobank Groep NV.
Output may decline by about 5 percent because oil palm trees are reaching peak capacities this year, said Tony D. Costa, the president director of PT Bank Rabobank International Indonesia, the local unit of the world's biggest agricultural lender.
``Oil palm trees go into a production cycle,'' Costa said in an interview in Jakarta yesterday. ``The trees, when they produce too much, they get stressed and then they will produce less next year,''
Lower output from the two Southeast Asian nations may shore up palm oil prices after they plunged 65 percent from a March record amid a slump in crude oil prices and concern demand will weaken. Prices may stabilize at about $600 a metric ton in the second half of next year from $450 in the first half, Costa said.
Indonesia will probably produce 19.4 million tons next year, Agriculture Minister Anton Apriyantono said Aug. 11. That's up from 18.6 million tons this year, according to Derom Bangun, president of the country's palm oil association.
Earlier this month Indonesia and Malaysia agreed to jointly reduce output to reverse the plunge in prices.
Indonesia may cut output by as much as 100,000 tons in 2009 by replacing old trees, Achmad Manggabarani, director general at Indonesia's Agriculture Ministry said on Nov. 6. Malaysia may cut 2009 plans output by 700,000 tons through replanting, said Peter Chin, Malaysia's agriculture minister.
To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net
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