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Production
Estimates and Crop Assessment Division |
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Production
Estimates and Crop Assessment Division |
September 13, 2005
Malaysia's palm oil production is strongly influenced by rainfall levels. National average rainfall in the second quarter of 2005 was 188 millimeters per month, close to the normal amount of 199.9 millimeters. This level of rainfall is favorable for palm oil production in the first quarter of 2006 as well as more distant harvests in late 2006 and 2007. This was in contrast to above-normal rainfall in the fourth quarter of 2004 and below-normal rainfall in the first quarter of 2005, which were unfavorable for future output.
A review of data for the past 10 quarters shows that rainfall was below normal in 6 quarters and above normal in 4 quarters. The overall affect on yield is expected to be moderately detrimental to palm oil yields for the next six quarters, out to December 2006. Two of the quarters with above-normal rainfall occurred during the October/December wet season, so the rainfall was excessive rather than beneficial.
The Malaysian rainfall regression model (MRRM) forecasts yield for marketing year 2005/06 (Oct. 2005 – Sept. 2006) at 3.85 tons per hectare. This is below the 20 year trend of 3.92 tons. The MRRM forecast is probably below a reasonable estimate because the model does not adequately take into account that yields in recent years have been increasing rapidly. A reasonable way to interpret the MRRM model would be that it suggests slightly below trend yield should be expected. The 10-year trend yield is 4.2 tons per hectare.
If one takes the MRRM forecast yield level and multiplies it by an estimated harvested area of 3.60 million hectares, output is forecast at 13.9 million tons. This is below the official September USDA estimate for 2005/06 of 15.5 million metric tons, which corresponds to a yield of 4.30 tons per hectare using the same area estimate. Reasons cited for the increase in yields recently are improved tree varieties in newly planted and replanted areas, an increase of area reaching peak fruit bearing stage, relatively high palm oil prices that have encouraged a sufficient usage of fertilizers, and cultural practices that have resulted in better crude palm oil extraction rates. The Malaysian Palm Oil Board set a tolerance rate for unripe fruit of 2-3 percent at extraction mills, and the average oil extraction rate has improved from 19.8 percent during November 2003 – April 2004 to 20.2 percent during November 2004 – April 2005. The 4.30 tons per hectare yield estimate for 2005/06 is less than the 2004/05 estimated yield of 4.38 tons per hectare, which benefited from well above trend yields that likely cannot be maintained in the coming year.
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.
Oil palm production potential is reduced when trees are exposed to stressful conditions. Low moisture is the most common stressful condition oil palm faces, so monitoring rainfall is useful in predicting palm oil yield levels. The most critical periods for oil palm are 24 months, 18 months, and 6 months prior to maturation of the fruit bunches. Twenty-four months before fruit maturity is when sex selection of the flowers occurs. If oil palm trees are subjected to stress at this critical time, a higher proportion of the flowers become male flowers, which do not become fruit. Eighteen months before fruit maturity is the time of floral abortion. If oil palm trees are subjected to stress at this critical time, fewer flowers develop so a smaller number of fruit is produced. Six months before fruit maturity is the time of pollination. If oil palm is subjected to stress at this critical time, less pollination occurs, and a smaller number of fruit is produced.
