Indonesia's palm oil output seen 3 pct lower in Sept - Reuters survey

By Michael Taylor

JAKARTA, Oct 17 (Reuters) - Crude palm oil output in

Indonesia, the world's top producer, is expected to fall 3

percent in September, a survey of leading industry officials

showed, easing due to dry weather conditions earlier in the

year.

Palm production in Southeast Asia's largest economy was seen

at a median 2.68 million tonnes in September, according to a

Reuters survey of four Indonesian industry officials and

plantation firms, versus 2.75 million tonnes in August.

"You could argue that a drought in the early part of the

year is having a slight effect," said Chris de Lavigne, an

analyst at Frost & Sullivan. "There was a slightly dry period in

February which could be affecting the output right now."

September and October are often peak periods for palm output

in Southeast Asia, before output falls during the monsoon season

in November and December when thunderstorms and flooding can

delay harvesting and complicate transport of fruit to mills.

Indonesia is expected to produce around 30 million tonnes of

palm oil this year and export around 20 million.

The median estimate for Indonesian crude palm oil (CPO)

exports in September was 1.75 million tonnes, down from 1.72

million tonnes last month, while inventories were seen at 2.5

million tonnes versus 2.58 million tonnes in August.

In Malaysia, the world's No.2 palm oil producer, palm stocks

roaw to their highest in 18 months at end-September to 2.09

million tonnes, industry data showed.

"You tend to find that Indonesian palm is a little bit

cheaper and they were the first to put export tax down to zero,

so maybe it's been flying off the shelves a little bit quicker,"

added de Lavigne.

Palm plantations firms have come under pressure this year

after benchmark CPO prices fell almost 20 percent, hurt

by high inventories as anticipated demand from biodiesel

consumption lagged below target and the absence of a forecast

crop-damaging El Nino weather pattern.

In an attempt to remain competitive with rival grower

Malaysia, Indonesia slashed its monthly CPO export tax to zero

for October from 9 percent in September. This is likely to be

extended into November.

Major firms operating in Indonesia include Golden

Agri-Resources, Wilmar International and

Sime Darby Bhd. Top overseas buyers are India and

China.

Transparent and reliable palm oil data is difficult to find

in Indonesia. The Indonesian Palm Oil Association (GAPKI)

publishes monthly data provided by a professional surveyor, that

showed August exports fell 6.5 percent to 1.72 million tonnes.

The Reuters survey included contributions from GAPKI, the

Indonesian Palm Oil Board, the Indonesian Vegetable Oil Industry

Association and PT Sinar Mas Agro Resources & Technology

, one of the largest listed palm firms.

Palm oil is used as a cooking oil and in a wide variety

products ranging from candies to cosmetics and soaps. It is also

a popular "green" additive to fossil fuels.

Palm oil futures may end the year 2 percent above current

levels, but still down about 19 percent for the year, a Reuters

poll showed.

Below is a table of median Reuters CPO survey results for

2014 (all forecasts are in million tonnes):

Month Output Exports Inventories

September 2.675 1.750 2.500

August 2.750 1.720 2.575

(Reporting by Michael Taylor; Editing by Richard Pullin)