Indonesia's London Sumatra sees '09 CPO output up

JAKARTA, Nov 26 (Reuters) - PT Perusahaan Perkebunan London Sumatra Indonesia (LSIP.JK), one of the country's top palm oil producers, said on Wednesday it expected output to rise 10 percent next year from 342,000 tonnes targeted for this year.

The rise in crude palm oil output next year should come from new trees and an improvement in productivity after a slight fall this year, said Finance director Jay Wacher.

In 2007, London Sumatra produced 350,000 tonnes of crude palm oil, while in the first nine months of this year palm oil output reached 245,243 tonnes.

"For this year, productivity per hectare in North Sumatra may fall to 5 tonnes from 5.6 tonnes in 2007," Wacher said.

London Sumatra has about 40,000 hectares (98,840 acres) of oil palm plantations in North Sumatra, which normally have higher productivity than plantations in other regions.

Wacher said the decline in productivity was a cyclical matter related to the condition of trees.

London Sumatra may spend about 600 billion rupiah ($49.18 million) next year, matching this year's capital expenditure, he said, with the funding from internal cash flows.

Palm producers benefited from high palm oil prices early this year, although prices have since slumped about two thirds of from their record high in March.

London Sumatra, however, had mitigated some of the impact of the price fall after securing some forward sales contracts.

Wacher said London Sumatra had arranged forward sales of 36,050 tonne for October-December, priced at $908 per tonne on average.

It also had arranged forward sales of 12,000 tonnes in 2009, priced at $1,057.

"We don't expect buyers to default," Wacher said.

Malaysia's benchmark February palm oil contract KPOc3 on the Bursa Malaysia's Derivatives Exchange rose 17 ringgit, or 1.1 percent, to 1,537 ringgit ($423.8) per tonne at midday on Wednesday. (Reporting by Aloysius Bhui; Editing by Ed Davies)