Malaysia's 2009 palm oil output will rise only marginally following years of rapid growth, Hamburg-based oilseeds analysts Oil World said on Tuesday. Malaysia will produce 17.60 million tonnes of palm oil in calendar year 2009 against an estimated 17.56 million tonnes in 2008 and 15.82 million tonnes in 2007, it forecasts.
"The (palm tree) biological yield cycle is likely to decline further in early 2009, curbing palm oil production in Malaysia," it said. "It is possible that yields and production will fall below our current estimate in July/December 2009 owing to the delayed effect of reduced fertiliser application, mainly by smaller producers."
"The near-term palm oil supply fundamentals are bearish, but the medium-term prospects for 2009 point to a tightening of the supply fundamentals and a decline in palm oil stocks." Palm oil prices have fallen sharply in recent weeks in Malaysia and Indonesia largely due to current record stocks but remain above the lows reached in October despite falling crude fossil oil prices, it said.
"World market demand for vegetable oils and oilmeals has slowed down considerably for the near term, although consumption of vegetable oils and oilmeals has in our assessment been relatively better than is indicated by the recent very poor exports," it said. "The recent very slow buying activity has resulted in a decline of stocks in many importing countries, thus creating the need for high purchases in the medium term."