Malaysia's top palm oil state sees lower July output

Malaysia’s top palm oil state of Sabah will see output in July falling up to 15 percent because of biological tree stress, potentially cutting into stocks and forcing big buyer China to source more palm oil from Indonesia.

Located on the eastern side of Borneo island, Sabah accounts for nearly a third of Malaysia’s total palm oil output and any shortfall will drag palm stocks in the world’s No. 2 supplier of the vegetable oil below the 1.41 million tonnes notched in June.
Plantation owners and traders said on Wednesday that July crude palm oil output in Sabah could fall to 352,712 tonnes from 414,955 tonnes in June.

“Biological tree stress is a factor but it’s also the heavy rains six to eight months ago that have made pollination difficult and contributed to lower yields,” said a chief executive of a plantation company.

Mature oil palms are more likely to face prolonged biological stress that settled in after bumper harvests last year and younger trees are more hampered by heavy rains at the end of 2008 that disrupt early pollination.

Reuters