15/05/2012 (Jakarta Post) - Indonesia’s palm oil exports in the first quarter of this year rose higher than the expectation of local businesses, with the volume totaling 5.27 million tons, or up by 23.8 percent from the same period last year.

Indonesian Palm Oil Producers Association (Gapki) executive director Fadhil Hasan said that the high export volume was enabled by robust demand from key overseas buyers, particularly India and China. Exports to India rose by 37.48 percent to 1.48 million tons, while exports to China, for instance, surged by 20.64 percent to 682,472 tons in the first three months ending in March, according to Gapki’s statistics.

Bullish demand for Indonesian palm oil also came from another key buyer, the European Union, of which purchases jumped by 59.66 percent to 1.56 million tons during the period.

“This is likely due to higher palm oil needs for bio-diesel. The use of palm oil-based bio-diesel seems to rise significantly due to the mandatory requirement for renewable energy sources,” Fadhil told The Jakarta Post.

The Indonesian palm oil industry has been struggling to meet stringent sustainability standards demanded by major buyers in advanced economies in recent years. As of the end of March, local growers produced around 2.71 million tons of certified sustainable palm oil (CSPO) acknowledged by the multi-stakeholder auditing body, the Roundtable on Sustainable Palm Oil (RSPO), making it the largest CSPO producer in the world ahead of Malaysia, which traditionally holds the position.

Fadhil said that overall, the significant increase in palm oil exports in the first quarter was also driven by the lower output of other vegetable oils, particularly soybean, which made consumers transfer to palm oil.

The uncertainties in the world economy also contributed to higher demand as overseas buyers tended to maintain bigger stocks at the beginning of the year.

“We estimate the demand will remain stable in the second quarter and our exports will continue to rise,” he said, but declined to make any predictions for whole year.