KUALA LUMPUR, Sept 28 (Reuters) - Malaysia's crude palm oil production is expected to rise 2.5 percent in 2013 as more acreage matures and yields improve, the government said in its annual economic report, which was released on Friday.
Crude palm oil output in the world's second largest producer is expected to increase to 18.9 million tonnes from a projected 18.4 million tonnes this year, the Finance Ministry said in the 2012/2013 economic report.
For the first eight months of 2012, Malaysia produced 11.2 million tonnes compared to 12 million tonnes in the same period last year on less favourable weather conditions and a lower yield cycle.
The declines prompted the government to revise down its 2012 estimate to 18.4 million tonnes from an earlier forecast of 18.7 million tonnes. In 2011, palm oil output stood at 18.9 million tonnes.
The rebound in 2013 production is in part due to an increase in maturing oil palm acreage, the report said. Mature areas are expected to expand slightly to 4.44 million hectares from 4.38 million hectares projected for this year.
"With the acceleration of planting activity, total planted areas are expected to increase to 5.1 million hectares in 2012," said the report that was issued during Malaysia's annual budget presentation.
"This is in line with the government's efforts to increase fresh fruit bunch yields to 26.2 tonnes per hectare by 2020," the report added, noting yields are expected to hit 18 tonnes this year and 19.8 tonnes in 2013.
Malaysia has also pursued a replanting scheme to boost yields although with futures 0#FCPO: hovering at 2,500 ringgit ($810) a tonne, well above the cost of production seen at 1,200 ringgit, farmers have been reluctant to replant and lose out on profits.
The government report said just 26 percent of the 365,414 hectares with low yielding, aged oil palms have been replanted as of June this year.
Benchmark Malaysian palm oil futures are expected to remain around 3,100 ringgit on expectations of strong demand as the edible oil's discount to competing soyoil has widened, the report said.
