MARKET DEVELOPMENT
Producers Expect Moderate Increase in Palm Oil Exports Next Year
Producers Expect Moderate Increase in Palm Oil Exports Next Year
08/11/2014 (Jakarta Post) - Palm oil producers anticipate only a small increase in exports next year as demand from buyers is expected to be weak.
Palm oil exports are predicted to range from 21 to 22 million tons in 2015, up by 10.52 percent from this year, according to the Indonesian Palm Oil Producers Association (Gapki).
This modest estimation was due to the lack of significant economic growth among trading partners, especially those in China, Indonesia’s second-largest palm oil customer, said Gapki’s head of regional autonomy on Thursday.
“Growing by 10 percent is significant enough,” Susanto said during a press conference before the 10th Indonesia Palm Oil Conference (IPOC), which is scheduled for Nov. 26-28 in Bandung.
“If the US experiences consistent growth then it will also spur growth in China. And if China grows then so too will Indonesia,” he continued, adding that an improvement of economic conditions in the US will also positively impact the Indian economy, the largest buyer of Indonesian palm oil.
From January to September of this year, palm oil exports dropped by 1.75 percent from last year’s figures to reach a low of 15 million tons, according to Gapki’s statistics.
Shipments to India plunged by 26 percent to 3.3 million tons. The decline was driven by a wide array of factors including increases on import taxes and a shift to other vegetable oils in addition to overall slower economic growth across the nation.
Similarly, sales to China dropped by 10 percent to 1.6 million tons, largely triggered by difficulties accessing credit and a new regulation on pesticide residue.
Palm oil exports expected to range between 21 and 22 million tons
Modest estimate due to slowdown in China, second-biggest buyer
Output predicted to reach 32 million tons next year
Gapki aims to see annual exports reach 19 or 20 million tons, down by 10.4 percent from last year.
Gapki also forecasts that palm oil production will reach 32 million tons next year, up by 10.34 percent from the 29 million tons estimated for this year.
Based on the figures from the first three quarters, it would be quite difficult for local producers to hit the 20 million ton estimate unless demand significantly increased in the last quarter, Susanto said.
“Perhaps as Europeans make purchases in preparation for Christmas, demands will increase,” he said.
Gapki secretary-general Joko Supriyono said that the group expected the government to enforce biodiesel blending in order to facilitate palm oil consumption domestically.
“This is an important measure that will give Indonesia a better bargaining position in the global market by way of reducing overseas supply,” he said.
In late 2012, the government increased the portion of biodiesel in blended fuels to 10 percent, up from 7.5 percent. These blended fuels with higher concentrations of biodiesel are also used in power plants.
However, the execution of this rule has not gone smoothly. Palm oil producers disagree with the state-owned oil and gas firm Pertamina over the price of the fuel.
Palm oil exports are predicted to range from 21 to 22 million tons in 2015, up by 10.52 percent from this year, according to the Indonesian Palm Oil Producers Association (Gapki).
This modest estimation was due to the lack of significant economic growth among trading partners, especially those in China, Indonesia’s second-largest palm oil customer, said Gapki’s head of regional autonomy on Thursday.
“Growing by 10 percent is significant enough,” Susanto said during a press conference before the 10th Indonesia Palm Oil Conference (IPOC), which is scheduled for Nov. 26-28 in Bandung.
“If the US experiences consistent growth then it will also spur growth in China. And if China grows then so too will Indonesia,” he continued, adding that an improvement of economic conditions in the US will also positively impact the Indian economy, the largest buyer of Indonesian palm oil.
From January to September of this year, palm oil exports dropped by 1.75 percent from last year’s figures to reach a low of 15 million tons, according to Gapki’s statistics.
Shipments to India plunged by 26 percent to 3.3 million tons. The decline was driven by a wide array of factors including increases on import taxes and a shift to other vegetable oils in addition to overall slower economic growth across the nation.
Similarly, sales to China dropped by 10 percent to 1.6 million tons, largely triggered by difficulties accessing credit and a new regulation on pesticide residue.
Palm oil exports expected to range between 21 and 22 million tons
Modest estimate due to slowdown in China, second-biggest buyer
Output predicted to reach 32 million tons next year
Gapki aims to see annual exports reach 19 or 20 million tons, down by 10.4 percent from last year.
Gapki also forecasts that palm oil production will reach 32 million tons next year, up by 10.34 percent from the 29 million tons estimated for this year.
Based on the figures from the first three quarters, it would be quite difficult for local producers to hit the 20 million ton estimate unless demand significantly increased in the last quarter, Susanto said.
“Perhaps as Europeans make purchases in preparation for Christmas, demands will increase,” he said.
Gapki secretary-general Joko Supriyono said that the group expected the government to enforce biodiesel blending in order to facilitate palm oil consumption domestically.
“This is an important measure that will give Indonesia a better bargaining position in the global market by way of reducing overseas supply,” he said.
In late 2012, the government increased the portion of biodiesel in blended fuels to 10 percent, up from 7.5 percent. These blended fuels with higher concentrations of biodiesel are also used in power plants.
However, the execution of this rule has not gone smoothly. Palm oil producers disagree with the state-owned oil and gas firm Pertamina over the price of the fuel.