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Production
Estimates and Crop Assessment Division |
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Production
Estimates and Crop Assessment Division |
August 30, 2004
Rainfall in Malaysian palm oil regions was below normal during the first January-June 2004, and palm oil yields may be reduced from what they otherwise would have been in late 2004 and early 2005. However, based on rainfall over the past 10 quarters, Malaysian palm oil yields should to be near trend overall during the next year and a half. Production levels should trend higher as area under oil palm continues to expand at a fairly consistent rate.
Rainfall in the first two quarters of 2004 averaged 139 millimeters below normal across Malaysia. It rained 159 millimeters per month, on a weighted average basis, during the first quarter and 167 millimeters per month during the second quarter, that’s 13 and 33 millimeters below normal respectively. This should result in near to slightly below normal palm oil yields from October 2004 through March 2005 because low rainfall reduces pollination, which reduces yield 6 to 9 months after the low rainfall event.
Examining the last 10 quarters, above normal rainfall was received during 4 of the quarters, and below normal rainfall was received during the other 6 (see Malaysia Rainfall graph). As a result, output levels should be fairly close to trend during the next 6 quarters, but below normal output is expected from October 2004 to March 2005. Conversely, better than normal yields are expected during July to September 2004 and from April to December 2005.
An examination of historical yields indicates that deciding what normal yields are is a bit problematic (see Malaysia Palm Oil Yield graph). The lagged rainfall effect resulted in rather poor yields from 1997/98 to 1999/2000 when yields averaged 3.63 tons per hectare, but the lagged rainfall effect resulted in favorable yields from 2001/02 to 2002/03. Additionally, there has been a generally rising yield trend since 1991/92, as improved varieties of planting material have become available to oil palm plantations.
The Malaysia Palm Oil Board has released area-under-oil-palm-data for 2003, indicating that area expansion is continuing at about the same level as in previous years. The Board put mature area at 3.30 million hectares, up 115,000 hectares from 2002. The growth in area was 183,000 hectares in 2002 and 63,000 hectares in 2001. Mature area increased an average of 128,000 hectares per year over the last ten years. Immature area is area that has been planted but has not yet begun to produce fruit. It takes 3 to 4 years from planting until palm trees are mature enough to produce their first fruit bunches. Total area under palm, mature and immature, was 3.80 million hectares in 2003. Total area increased 132,000 hectares in 2003 compared to a 10-year-average growth of 150,000 hectares.
Using Malaysian rainfall data, yield for 2003/04 (Oct.-Sept.) is estimated by the Malaysia Rainfall Regression Model (MRRM) at 4.00 tons per hectare, which is above the 5-year-average of 3.91 tons per hectare, but below the 10-year trend of 4.20 tons per hectare (see Malaysia Palm Oil Area and Production graph). This projection would give a production level of 13.2 million tons (using a harvested area of 3.30 million hectares), with one quarter remaining in the marketing year. The projected level is less than USDA's August forecast of 13.4 million tons. The USDA is giving credit to increased fertilizer applications and the use of improved selections of oil palm for higher yields that have been seen recently. The MRRM projects yield for 2004/05 at 3.77 tons per hectare, and that would give a production level of 13.0 million tons using harvested area projected at 3.46 million hectares. This is less than the 13.8 million tons forecast by USDA in August.
Note: The MRRM linear regression model uses rainfall lagged 3 quarters, 1 year cumulative rainfall lagged 6 quarters, and time as independent variables regressed against yield. Because of the characteristics of linear regression, the model continues to increase projected yields even as rainfall becomes excessive; thus, the model tends to overstate yield when average monthly rainfall lagged 3 quarters is above 300 mm, and understate yield when rainfall is optimal. A variety of information sources are used in determining official USDA estimates for Malaysian palm oil.
