Indonesia set the reference price of crude palm oil (CPO) for export duty at US$568.94 per metric ton (MT) of CPO in June, said trade ministry on Monday (05/29) - Photo by GAPKI Secretariat

JAKARTA (TheInsiderStories) – Indonesian Palm Oil Association or GAPKI noted the country’s palm oil production grew 13 percent annually to 36 million tons in September 2019, its latest data showed on Wednesday (11/20). Of the total production, 26 tons were absorbed in the export market or grew 13 percent compared to exports in August and rose 4 percent on an annual basis.

The increase in palm oil exports, said GAPKI, was due to changes in import duty tariff policies from Indonesia which became the same as palm oil from Malaysia to India. The association noted Indonesian palm oil exports to India increased sharply by 51percent to 481,000 tons in September.

However, GAPKI’s executive director Mukti Sardjono said that palm oil production in September fell by 2 percent compared to a month earlier. Palm oil production in a number of provinces was recorded to decline including North Sumatra, Central Kalimantan, and Jambi.

But the decline in production was offset by increases in production in a number of other provinces, Sardjono adds, saying “until September this year, the rain has not yet fallen so that there has been a water deficit that has affected the formation of female flowers.”

In addition, the long dry season throughout 2019 also caused fertilization to be carried out. Both of these will affect the achievement of production next year.

Meanwhile, palm oil domestic consumption up to September reached 13.1 million tons, or about 38 percent higher compared to the same period last year. The biggest absorption of palm oil in the domestic market is for biodiesel which has doubled.

For the September export market compared to August, the increase occurred in all products except biodiesel and lauric oil. The large decline in biodiesel exports occurred in the destination markets of China, Southeast Asia, and other East Asian countries.

Nevertheless, the largest export volume up to September (year to date) is still to China at 4.8 million tons. Followed by the European Union by 4 million tons, Southeast Asian and East Asian countries besides China by 3.8 million tons, Africa by 3.7 million tons, and India by 3.3 million tons.

For September, the biggest export is to Africa, amounting to 687,000 tons or US$ 402 million. Followed by China 560,000 tons ($286 million), India 481,000 tons ($238 million), and the European Union 315,000 tons ($155.6 million).

With production, exports, and consumption as mentioned above, palm oil stocks in September fell by 2 percent compared to the previous month’s stock of 3.73 million tons.

In terms of prices, palm oil has shown a consistent increase since July and reached $680 cif Rotterdam. Apart from entering the winter, where prices of fats and oils generally rise, it is also caused by a fall in stockpiles due to poor production and fears of a decline in Indonesia’s palm oil exports.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com