MARKET DEVELOPMENT
Crop Exporters Look To Better Year-end After First Half Headwinds
Crop Exporters Look To Better Year-end After First Half Headwinds
07/08/2013 (Jakarta Post) - Exports for crops like crude palm oil (CPO) and rubber will likely rebound in the second half of the year after dwindling exports due to the ailing global market, while coffee will remain low.
Indonesia’s CPO exports are forecast to recover in the second half after falling on weakening demand from Asia, traditionally the largest market, says the Indonesian Palm Oil Association (GAPKI).
Total export revenue of CPO fell to around US$13 billion in January-June, from $14 billion a year earlier as prices plunged by one-fourth and stayed flat during the period, GAPKI executive director Fadhil Hasan said on Monday.
“But exports should recover in the second half as has always been the pattern in previous years,” he told The Jakarta Post over the phone.
GAPKI earlier said CPO exports fell in June by 11 percent month-on-month to 1.62 million tons because of lower demand from India and China — the top CPO export markets for the world’s largest CPO producer.
India lowered its CPO demand due to the weakening of its currency to the US dollar, while deceleration in China’s economic growth had led to lower consumption of CPO in the Asian giant.
According to the ministry, the European and US markets showed the opposite direction as a result of the strengthening of the dollar against some Asian currencies, including the rupiah, coupled with the scarcity of soya, a substitute of CPO in derivative products.
Despite the fall in exports, the production of the commodity increased from 8 million tons to 10 million tons year-on-year.
According to Fadhil, CPO production was estimated to reach 18 million tons by the end of this year.
Ministry data said CPO contributed $19.35 billion in exports last year, more than half of total plantation exports, which reached $31.7 billion. CPO was also the biggest export commodity in the plantation sector with around 20.57 million tons exported in 2012. The ministry estimated that CPO production would increase to 24.4 million tons this year.
Meanwhile, the ministry said it was also optimistic about the future of rubber after its price had declined because of oversupply and extremely erratic weather.
Secretary to directorate general for plantation at the ministry, Mukti Sardjono, earlier said the price of rubber had increased to Rp 18,128 per kilogram last Thursday, from previously Rp 17,898, following last month’s statement from world major rubber producers — Thailand, Indonesia and Malaysia — that rubber supplies in those countries had decreased.
Rubber production stood at around 3 million tons last year, more than the ministry’s expectation, thanks to rubber production from the Forestry Ministry’s industrial forest concessions (HTI). About 2.6 million tons of rubber was exported last year, with the amount of $8.6 billion.
Unlike CPO and rubber, Indonesia’s coffee is gearing up for lower production and exports this year.
Indonesia Coffee Exporters Association (GAEKI) chairman Hutama Sugandhi said wet weather had impeded coffee harvest, causing coffee fruits to fall off their trees prematurely. They are also known to encourage the growth of fungi which ruins coffee beans.
“We estimate that weather anomalies will cut production by 15-20 percent this year,” he said.
Indonesia, the world’s third largest coffee exporter after Brazil and Vietnam, produced 738,000 tons of coffee last year. It was earlier forecast that this year’s production would be flat at 700,000 tons.
“The decrease in production will lower exports by 10 percent,” Hutama added.
The ministry data shows that Indonesia exported 175,100 tons of coffee valued at $439.16 million as of May this year. The country exported 464,100 tons of coffee worth $1.31 billion throughout last year.
Indonesia’s CPO exports are forecast to recover in the second half after falling on weakening demand from Asia, traditionally the largest market, says the Indonesian Palm Oil Association (GAPKI).
Total export revenue of CPO fell to around US$13 billion in January-June, from $14 billion a year earlier as prices plunged by one-fourth and stayed flat during the period, GAPKI executive director Fadhil Hasan said on Monday.
“But exports should recover in the second half as has always been the pattern in previous years,” he told The Jakarta Post over the phone.
GAPKI earlier said CPO exports fell in June by 11 percent month-on-month to 1.62 million tons because of lower demand from India and China — the top CPO export markets for the world’s largest CPO producer.
India lowered its CPO demand due to the weakening of its currency to the US dollar, while deceleration in China’s economic growth had led to lower consumption of CPO in the Asian giant.
According to the ministry, the European and US markets showed the opposite direction as a result of the strengthening of the dollar against some Asian currencies, including the rupiah, coupled with the scarcity of soya, a substitute of CPO in derivative products.
Despite the fall in exports, the production of the commodity increased from 8 million tons to 10 million tons year-on-year.
According to Fadhil, CPO production was estimated to reach 18 million tons by the end of this year.
Ministry data said CPO contributed $19.35 billion in exports last year, more than half of total plantation exports, which reached $31.7 billion. CPO was also the biggest export commodity in the plantation sector with around 20.57 million tons exported in 2012. The ministry estimated that CPO production would increase to 24.4 million tons this year.
Meanwhile, the ministry said it was also optimistic about the future of rubber after its price had declined because of oversupply and extremely erratic weather.
Secretary to directorate general for plantation at the ministry, Mukti Sardjono, earlier said the price of rubber had increased to Rp 18,128 per kilogram last Thursday, from previously Rp 17,898, following last month’s statement from world major rubber producers — Thailand, Indonesia and Malaysia — that rubber supplies in those countries had decreased.
Rubber production stood at around 3 million tons last year, more than the ministry’s expectation, thanks to rubber production from the Forestry Ministry’s industrial forest concessions (HTI). About 2.6 million tons of rubber was exported last year, with the amount of $8.6 billion.
Unlike CPO and rubber, Indonesia’s coffee is gearing up for lower production and exports this year.
Indonesia Coffee Exporters Association (GAEKI) chairman Hutama Sugandhi said wet weather had impeded coffee harvest, causing coffee fruits to fall off their trees prematurely. They are also known to encourage the growth of fungi which ruins coffee beans.
“We estimate that weather anomalies will cut production by 15-20 percent this year,” he said.
Indonesia, the world’s third largest coffee exporter after Brazil and Vietnam, produced 738,000 tons of coffee last year. It was earlier forecast that this year’s production would be flat at 700,000 tons.
“The decrease in production will lower exports by 10 percent,” Hutama added.
The ministry data shows that Indonesia exported 175,100 tons of coffee valued at $439.16 million as of May this year. The country exported 464,100 tons of coffee worth $1.31 billion throughout last year.