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Dry Weather to Trim Indonesia's 2014 Palm Oil Output Gains -Industry
Dry Weather to Trim Indonesia's 2014 Palm Oil Output Gains -Industry
20/11/2014 (Reuters) - Palm oil output in Indonesia will rise by only 500,000 tonnes this year, an industry group in the world's top producer said on Wednesday, lower than a previous estimate due to a longer than usual dry season in key plantation areas.
Output will be 28.8 million tonnes this year, Sahat Sinaga, executive director of the Indonesian Vegetable Oil Association (GIMNI), told Reuters, lower than the group's previous forecast of 30.6 million.
Prolonged dry spells in both Sumatra and Kalimantan have hampered production, said Sinaga, whose association has 31 members, mostly refineries. Palm output will hit about 31 million tonnes in 2015, he added.
"The dry season goes from May to September, but now it has extended to October and even November," said Sinaga. "It is quite significant."
Indonesia's refinery capacity will be unchanged at 45 million tonnes in 2015, said Sinaga, adding that refineries were running at just 65 percent capacity in the second half of this year due to lower demand for the tropical oil.
Crude Palm Oil Rotterdam CIF , which has eased 17 percent this year and was quoted at $753.90 a tonne on Tuesday, will peak at between $760-$780 a tonne in the first quarter of 2015 due to lower output and rising domestic biodiesel demand, Sinaga said.
Indonesia introduced a regulation in August 2013 aimed at boosting the use of palm-based biodiesel and Sinaga estimated that demand for biodiesel would total 2 million tonnes this year, rising to 2.4-2.5 million in 2015.
New Indonesian President Joko Widodo should focus on improving smallholder plantation palm yields rather than expanding the current 10.5 million hectares, said Sinaga, who has met senior government officials.
The government must also help smallholders create cooperatives so they can get easier access to credit, combat haze pollution and achieve sustainability certification, he added.
Numbering up to one million, smallholders account for about 40 percent of Indonesia's total production.
Widodo is yet to announce any major palm policies but urged some European countries and the United States to allow greater access for Indonesian palm at a G20 meeting last week.
Output will be 28.8 million tonnes this year, Sahat Sinaga, executive director of the Indonesian Vegetable Oil Association (GIMNI), told Reuters, lower than the group's previous forecast of 30.6 million.
Prolonged dry spells in both Sumatra and Kalimantan have hampered production, said Sinaga, whose association has 31 members, mostly refineries. Palm output will hit about 31 million tonnes in 2015, he added.
"The dry season goes from May to September, but now it has extended to October and even November," said Sinaga. "It is quite significant."
Indonesia's refinery capacity will be unchanged at 45 million tonnes in 2015, said Sinaga, adding that refineries were running at just 65 percent capacity in the second half of this year due to lower demand for the tropical oil.
Crude Palm Oil Rotterdam CIF , which has eased 17 percent this year and was quoted at $753.90 a tonne on Tuesday, will peak at between $760-$780 a tonne in the first quarter of 2015 due to lower output and rising domestic biodiesel demand, Sinaga said.
Indonesia introduced a regulation in August 2013 aimed at boosting the use of palm-based biodiesel and Sinaga estimated that demand for biodiesel would total 2 million tonnes this year, rising to 2.4-2.5 million in 2015.
New Indonesian President Joko Widodo should focus on improving smallholder plantation palm yields rather than expanding the current 10.5 million hectares, said Sinaga, who has met senior government officials.
The government must also help smallholders create cooperatives so they can get easier access to credit, combat haze pollution and achieve sustainability certification, he added.
Numbering up to one million, smallholders account for about 40 percent of Indonesia's total production.
Widodo is yet to announce any major palm policies but urged some European countries and the United States to allow greater access for Indonesian palm at a G20 meeting last week.