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Malaysian Palm Oil Output Will
Continue To Slow
During the 12 months ending April 1998, the annual increase in Malaysian palm oil output dropped by more than 600,000 tons from a year earlier. During the 12-months ending Sept. 1998, Malaysian palm oil output is forecast to shrink more than 400,000 tons from a year earlier. The shortfall in Malaysian palm oil output emanates from the lagged effects of reduced rainfall which more than offset the upward trend in bearing tree numbers. In the past 20 years, Malaysia's 12 month palm oil output registered 4 declines which lasted between 7 and 12 months. Since Malaysian rainfall continued sharply below normal through April 1998, we expect Malaysia's 12 month trailing palm oil output to continue below the year earlier level at least through the first half of 1998/99. Because Malaysia's palm oil exports account for more than one-fourth of world vegetable oil exports, and normally an even larger share of the growth, Malaysia's current situation has positive implications for U.S. vegetable oil exports in coming months.
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