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Production
Estimates and Crop Assessment Division |
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Production
Estimates and Crop Assessment Division |
February 11, 2003
Average monthly rainfall in Malaysia during the fourth quarter of 2002 was 263 millimeters, 28 millimeters or 10 percent below normal. Rainfall has now been below normal for three of the last four quarters. USDA's production forecast for 2002/03 (Oct.-Sept.) remains unchanged at 11.8 million tons, largely because actual production in the fourth quarter of 2002 came in higher than expected. However, near to below normal yields are projected, beginning in the second quarter of 2003. Early indications are that yields may drop below normal in 2004.
A variety of information sources are used to determine the official USDA estimate for Malaysian crude palm oil. One source is USDA's Malaysia Rainfall Regression Model (MRRM – see Note) which uses cumulative rainfall as an independent variable to forecast palm oil yield. According to the model, the yield forecast for 2002/03 (Oct. - Sept.) is 3.73 tons per hectare. This is slightly below the 5-year average of 3.79 tons per hectare, and well below the yield of 3.95 tons per hectare seen in 2001/02.
Palm area for 2002/03 is estimated at 3.065 million hectares. Using the forecast yield of 3.73 tons per hectare implies output of 11.4 million tons of crude palm oil for the 2002/03 marketing year can be projected. The MRRM projection is somewhat lower than the official USDA forecast for 2002/03 of 11.8 million tons. USDA is forecasting essentially flat production for the third year in a row.
Note: The MRRM linear regression model is developed by the United States Department of Agriculture. It 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. The model tends to overstate yield when average monthly rainfall lagged 3 quarters is above 300 mm, and understate yield when rainfall is optimal.
