Oil palm growers in Indonesia, the world's biggest producing nation, are returning to planting new trees after a freeze of nearly a year prompted by the global recession, New Britain Palm Oil has said.

The London-listed palm oil and seed producer said revenues from seeds halved to $1.8m in the first six months of the year thanks to a slump in Indonesian demand "that has restricted and continues to restrict oil palm expansion in that country".

However, seed orders were picking up for delivery later in 2009, New Britain said, adding that it had sufficient stocks to meet the demand.

"Indonesia buyers are returning to the market after nearly a year of no new plantings," the company said.

The country had been undertaking a huge expansion, raising area by 10% a year and output by 17% a year this decade, to overtake Malaysia and the biggest producer three years ago, according to US data.

Price drop

The comments came as New Britain, which operates in the main in Papua New Guinea, reported an 11.9% slide to $58.5m in earnings for the first half of 2009, on revenues down 8.2% at $161.5m.

The decline reflected primarily a drop in palm oil prices which, at $694 a tonne at the end of June, were 27% lower than a year before.

The group's plantation production grew by 15.0% to 767,000 bunches, with palm oil output rising 13%.

Market fundamentals

New Britain added it had sold 255,000 tonnes of oils, equivalent to about two months production, for delivery later this year and in 2010 at $752 a tonne, higher than the $730 a tonne in the first six months.

While stopping short of making a forecast on market prices, the group noted strong Indian demand, and "relatively low" global palm oil stocks equivalent to 1.5 months' supply.

New Britain shares closed 21p lower at 360.25p.