Indonesian government set the reference price of crude palm oil (CPO) products for export duties at US$1,036.22 a metric tones of CPO - Photo by MPOC Office

JAKARTA (TheInsiderStories) – Indonesian government set the reference price of crude palm oil (CPO) products for export duties at US$1,036.22 a metric tones (MT) of CPO in March. The benchmark price increased by 0.92 percent than February, which was $1,026.78 a MT.

Because of the rising price, said the director general at trade ministry, Didi Sumedi, his office set the export levy for CPO and derivative products stayed at $93 per MT. Then, the ministry enacted the reference price for cocoa beans in March was $2,499.04 a MT or down 1.51 percent from the previous month of $2,537.37 a MT caused the declined.

“The increase in the reference price of CPO was due to the continued strengthening of international prices, while reference price of cocoa beans declined inline with lower international prices. This does not affect to the export levy for cocoa beans which remains at 5 percent,” he noted in an official statement released on Monday (03/01).

In addition the benchmark price of leather products has decreased up to 60 percent from the previous month and for wood products there is no change.

In February, the Indonesian Palm Oil Association (GAPKI) estimates that the crude palm oil price will be in the range $850 to $900 per MT of CPO in this year, supported by a number positive catalysts. One of major driver is the improvement demand from the global supplier.

According deputy chairman of the organization, Togar Sitanggang, if the COVID-19 vaccination program is success and world economic growth recover, coupled with the domestic use for fuel with a 30 percent bio energy, he believed the world demand will rise. However, he said, there are also other things could affect the palm oil prices, like an increase in soybean price.

Earlier, the coordinating minister for economic affairs, Airlangga Hartarto, was also optimistic that CPO prices will be higher than 2020. He said, there are several factors, like the rising demand for palm oil, the reopen global economy, the sustainability of biodiesel policies in Indonesia, and the increase demand by major trading partners.

The CPO and derivative products also contributes to export values, around $20 billion per year. Recently, the Indonesian Vegetable Oil Industry Association (GIMNI) projects that CPO production in 2021 will grow by around 3 percent to 48.4 MT of CPO from this year’ 47 MT of CPO, inline with the increasing of prices and the conducive climate.

Crude Palm Kernel Oil production also will increase by about 4 percent from 4.6 MT of CPO to 4.8 MT of CPO in 2021. Executive director of GIMNI, Sahat Sinaga, also believed that there will be an increases in domestic palm oil consumption by around 14 percent to 19.75 MT of CPO in 2021.

Its projected that starting next year, the domestic consumption palm oil for food will be around 8.8 MT of CPO, for non-food items around 1.67 MT of CPO and for biodiesel around 9.2 MT of CPO. According to him, the increases in biodiesel consumption provided the B30 program was running.

Then, palm oil exports in 2021 will also increase by 11 percent to 36.7 MT of CPO due to an increase in downstream palm oil product exports by around 16.6 percent to 29.29 MT of CPO. In addition, the CPO exports will experienced a decline of around 8 percent to 7.4 MT of CPO.

Written by Editorial Staff, Email: theinsiderstories@gmail.com