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INTERVIEW-Indonesian 2014 Palm Output to Rise 6 Pct, Prices to Firm - Industry Group
INTERVIEW-Indonesian 2014 Palm Output to Rise 6 Pct, Prices to Firm - Industry Group
26/11/2013 (Reuters) - Palm oil output in Indonesia will grow by up to 6 percent to 28.5 million tonnes next year, an industry group in the top producer said on Monday, and global prices should also rise as the world economy recovers, to an average $850 to $950 a tonne.
Palm oil output this year will be 27 million tonnes, slightly lower than an estimate of 27.5 million tonnes at the start of the year due to wet weather, Fadhil Hasan, executive director of the Indonesian Palm Oil Association (GAPKI), told Reuters.
"It is very difficult to estimate and down to judgment -- maybe a high of 28.5 million tonnes," he said, referring to next year's output. "Before we estimated 27.5-28 million tonnes (for 2013) ... (But) it was a wet, dry season."
The unusually wet weather had hit plantations on Sumatra island, with output falling by 15-20 percent at some firms, Hasan added.
Earlier this month, a GAPKI official forecast that Indonesian palm oil exports would increase as much as 15 percent to 18.5-19 million tonnes this year.
Benchmark Malaysian palm oil futures hit their highest in more than a year last week and have gained about 10 percent in 2013 to trade at 2,649 ringgit ($820) per tonne.
Next year, palm oil prices would average between $850 and $950 a tonne, Hasan said, citing a recovery in the global economy and higher Indonesian demand due to new biodiesel regulations.
These were announced by the energy ministry in August and are to be enforced from January, which should increase demand for the palm-based biofuel.
IRAN EFFECT
Hasan struck one note of caution, though, saying a deal between six world powers and Iran aimed at curbing the latter's nuclear programme would result in lower crude oil prices that could weigh on palm prices.
Indonesia's plantation sector has come under heavier scrutiny this year in the wake of forest-burning in Sumatra that caused one of Southeast Asia's worst air-pollution crises, with record levels of smog blanketing neighbouring Singapore and Malaysia.
Hasan did not think higher prices would spur more burning of forests to clear land for palm plantations and anyway denied that plantation firms were to blame for the pollution.
"Haze? It's nothing to do with palm oil. It's to do with the farmers, nothing to do with palm oil plantations. The haze has always appeared, whether the price is good or not," he said.
Palm oil is used mainly as an ingredient in food such as biscuits and ice cream, or for biofuel, and estates growing palm in Indonesia sprawl across more than 8 million hectares (19.8 million acres).
Forests in the archipelago are being cleared for an expanding palm oil industry, which green groups blame for speeding up climate change and destroying wildlife.
In May, the government extended a moratorium on new plantation and timber concessions in primary forests and peatland. Norway has agreed to provide the country with up to $1 billion in financing to help reduce deforestation.
With a presidential election due next year, Hasan said the next government should look to use money raised from the palm oil export tax to invest in infrastructure and in research and development for the palm sector.
Southeast Asia's largest economy has a palm export tax system that aims to boost downstream industries, secure domestic supplies and reduce volatility in cooking oil prices.
Major palm oil firms operating in Indonesia include PT Sinar Mas Agro Resources and Technology, Astra Agro Lestari , Malaysia's Sime Darby and Singapore-based Wilmar International Ltd. ($1 = 3.2155 Malaysian ringgit).
Palm oil output this year will be 27 million tonnes, slightly lower than an estimate of 27.5 million tonnes at the start of the year due to wet weather, Fadhil Hasan, executive director of the Indonesian Palm Oil Association (GAPKI), told Reuters.
"It is very difficult to estimate and down to judgment -- maybe a high of 28.5 million tonnes," he said, referring to next year's output. "Before we estimated 27.5-28 million tonnes (for 2013) ... (But) it was a wet, dry season."
The unusually wet weather had hit plantations on Sumatra island, with output falling by 15-20 percent at some firms, Hasan added.
Earlier this month, a GAPKI official forecast that Indonesian palm oil exports would increase as much as 15 percent to 18.5-19 million tonnes this year.
Benchmark Malaysian palm oil futures hit their highest in more than a year last week and have gained about 10 percent in 2013 to trade at 2,649 ringgit ($820) per tonne.
Next year, palm oil prices would average between $850 and $950 a tonne, Hasan said, citing a recovery in the global economy and higher Indonesian demand due to new biodiesel regulations.
These were announced by the energy ministry in August and are to be enforced from January, which should increase demand for the palm-based biofuel.
IRAN EFFECT
Hasan struck one note of caution, though, saying a deal between six world powers and Iran aimed at curbing the latter's nuclear programme would result in lower crude oil prices that could weigh on palm prices.
Indonesia's plantation sector has come under heavier scrutiny this year in the wake of forest-burning in Sumatra that caused one of Southeast Asia's worst air-pollution crises, with record levels of smog blanketing neighbouring Singapore and Malaysia.
Hasan did not think higher prices would spur more burning of forests to clear land for palm plantations and anyway denied that plantation firms were to blame for the pollution.
"Haze? It's nothing to do with palm oil. It's to do with the farmers, nothing to do with palm oil plantations. The haze has always appeared, whether the price is good or not," he said.
Palm oil is used mainly as an ingredient in food such as biscuits and ice cream, or for biofuel, and estates growing palm in Indonesia sprawl across more than 8 million hectares (19.8 million acres).
Forests in the archipelago are being cleared for an expanding palm oil industry, which green groups blame for speeding up climate change and destroying wildlife.
In May, the government extended a moratorium on new plantation and timber concessions in primary forests and peatland. Norway has agreed to provide the country with up to $1 billion in financing to help reduce deforestation.
With a presidential election due next year, Hasan said the next government should look to use money raised from the palm oil export tax to invest in infrastructure and in research and development for the palm sector.
Southeast Asia's largest economy has a palm export tax system that aims to boost downstream industries, secure domestic supplies and reduce volatility in cooking oil prices.
Major palm oil firms operating in Indonesia include PT Sinar Mas Agro Resources and Technology, Astra Agro Lestari , Malaysia's Sime Darby and Singapore-based Wilmar International Ltd. ($1 = 3.2155 Malaysian ringgit).