Sampoerna Agro says its palm oil output may jump 20 per cent in 2014

JAKARTA - Annual output at Indonesian palm oil firm Sampoerna Agro could grow by as much as 20 per cent next year to about 1.7 million tonnes, helped by favourable weather and maturing trees, a company official said on Friday.

For the first nine months of 2013 production was 800,000 tonnes and it is forecast to total 1.4 million for the year as a whole, Michael Kesuma, head of investor relations, told Reuters in an email. That is down from 1.7 million in 2012.

Output had been running around 30 per cent lower than last year because of extreme weather conditions in recent years, especially on its South Sumatra estates, but had picked up.

"The full year estimation is 1.4 million tonnes, meaning a closing of the gap from 30 per cent to 20 per cent in the final three months due to a surge in output," Kesuma said.

"For 2014, we expect a 10-20 per cent increase in output, mainly due to more favourable weather happening so far this year and a maturing age profile."

Last week, the Indonesian Palm Oil Board forecast that palm production in the world's top producer would jump 13 per cent to 29.5 million tonnes next year as more maturing plantation areas are harvested.

Malaysian palm oil futures jumped to their highest in more than a year in November and have gained about 8 per cent in 2013 to trade at 2,653 ringgit (S$1032) per tonne.

After falling by about a quarter in 2012, prices turned around in the third quarter in anticipation of a rise in demand due to a new biodiesel requirement in Indonesia and the prospect of lower-than-expected output by the dominant Southeast Asian growers.

Sampoerna Agro, part of the Sampoerna Strategic Group, is targeting palm plantation expansion of between 5,000 and 10,000 hectares next year, Kesuma said. That compares with a total area of 120,000 hectares (296,500 acres) at present.

The current plantation area and expansion plans include plasma estates, which are owned by smallholders and often run with the help of larger firms, who then take palm oil from those estates.