KUALA LUMPUR (Commodity Online) : Malaysia’s palm oil production is likely to fall this season as drought dried up two major rivers bringing water to plantations.

According to country’s Agriculture ministry, the output is likely to shrink by 15 percent due to prolonged dry spell in its top two producer state of Johor in mainland Malaysia, and Sabah on the island of Borneo.

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Sabah is Malaysia’s top palm oil producing state, accounting for a quarter of total national output. In February, its palm oil output tumbled 15.7 per cent from a month ago to below 400,000 tonnes.

Two rivers in Johor, Sungai Muar and Sungai Benut, are at danger levels. Besides helping to irrigate the bulk of Johor’s oil palm estates, the rivers provide water to nearby palm oil mills in processing the oil palm fruit bunches.

According to Malaysian Meteorological Department, the hot weather will go on till April or May. The dry spell is expected to continue until May in parts of mainland Malaysia and Sabah with no rains over the next week.

Malaysian palm oil futures slipped 0.8 per cent today as traders booked profits from a crude oil-driven commodities rally in the previous session, but concerns about lower output curbed losses.

Malaysia is the world’s second largest producer of the commodity, after Indonesia.

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