New Britain Palm Oil and Sipef revealed research which they believe could "at least double" palm oil yields even amid ideas that the world has enough of the vegetable oil, for now, limiting prospects for a rebound in prices.
The palm oil groups, which both operate in Papua New Guinea, and have some estates adjoining each other, said that, using conventional breeding technology, they would develop oil palm trees delivering a "quantum leap" in yield.
The forecast is based on the yield improvements achieved using similar, F1 breeding technology in on other crops, such as corn, besides on "oil palm's estimated physiological yield potential".
And it follows the announcement by the Malaysian Palm Oil Board that the mapping of the oil palm genome had revealed that a single gene, called Shell, appears critical for determining yield potential.
However, the launch of the programme, expected to take a decade to come to show results in the field, comes amid a period of rising palm oil inventories, as trees planted in the top producing countries of Indonesia and Malaysia in planting booms earlier this century continue to mature.
Oil palms can take a decade to reach maximum productivity, lasting a further decade or more before they are replaced.
Furthermore, demand growth - supercharged last year by the poor world production of soybeans, the source of rival soyoil – is expected to moderate in 2013-14 thanks to better soy crops, besides stronger world harvests too of rapeseed and sunflower, alternative sources of vegetable oils.
'High risk of a slowdown'
Macquarie on Monday also highlighted deteriorating economic growth as a depressant to demand, warning of a "high risk of a slowdown of imports of palm oil into key consuming countries next year".
The bank forecast Kuala Lumpur palm oil futures remaining at levels below 2,700 ringgit a tonne, a historically modest price, until at least the end of 2015.
Prices topped 3,600 ringgit a tonne last year, and hit their record of 4,332 ringgit a tonne in March 2008.
Malaysian Palm Oil Board data on Thursday are expected to show production jumping 15% month on month in September to top 2.0m tonnes.
'Efficient use of precious resources'
Nick Thompson, the New Britain Palm Oil chief executive, said that the group was "committed to delivering higher yields per hectare, a principal that underpins the very notion of sustainable agriculture".
New Britain Palm Oil has a target of raising yields of fresh palm fruit bunches to 30 tonnes per hectare, from the 23.8 tonnes per hectare last year.
Sipef managing director said that the breeding programme "will ensure that we can make more efficient use of precious resources, including arable land towards improving sustainability standards and oil palm yields".
The programme also comes amid around of media articles criticising the palm oil industry on grounds of its environmental impact, the alleged health issues linked to the vegetable oil.
Sipef last week, in a rebuttal of the criticisms, said that "most of these articles are rather one-sided and have not incorporated the full story of palm oil.
"A major asset of palm oil is its high yield per hectare, provided it is produced sustainably".
New Britain Palm Oil shares closed up 1.3% at 400p in London. In Brussel, Sipef shares ended up 3.0% at E51.98.