The Indonesian government plans to implement the progressive export levy on crude palm oil from US$55 a metric ton of CPO to $180 per MT of CPO - Photo by GAPKI Secretariat Office

JAKARTA (TheInsiderStories) – Indonesia’ palm oil exports and its derivatives dropped nearly to 34 percent from 6.6 million tons (MT) to 4.93 MT in the first two months of 2020, said the association on Tuesday (04/21). The decreasing driven by lower exports to major buyer, China, India, and European Union (EU) caused of the COVID-19 outbreak.

Based on the Indonesian Palm Oil Producers (GAPKI) data, export to China dived by 500,000 tons, India fell by 188,000 tons and to Africa were down by 250,000 tons compared to last year. By the end of February, the association reported, the palm oil stockpile stood at 4.08 MT, dropped from prior month 4.54 MT.

In 2019, the country crude palm oil (CPO) export export recorded 36.18 MT, amid the declining demand from India and Europe. The amount rose by 4.2 percent compared to 2016’ amount at 34.71 MT.

At the year, according to the chairman, Joko Supriyono, rising demand from China, the Middle East, and African markets has offset the declined from other countries. While, India, as the world’ main vegetable oil buyer, posted the biggest drop in shipments because it imposed higher import tariffs on Indonesian palm oil compared to its competitor Malaysia.

Palm oil production in 2019 reached 51.8 MT of CPO, or about 9 percent higher than production in 2018. While, domestic consumption rose 24 percent to 16.7 MT, with details of biodiesel consumption up 49 percent, food up 14 percent and oleochemicals up 9 percent.

The export volume of palm products in 2019 was 35.7 MT, up 4 percent from exports in 2018. The export value of palm oil products including oleochemicals and biodiesel 2019 is estimated reached US$19 billion.

This export value was 17 percent lower than the export of palm oil products in 2018 which is valued at $23 billion. The main destinations for exports of palm oil products in 2019 besides oleochemicals and biodiesel in Indonesia are China (6 MT of CPO), India (4.8 MT of CPO), and EU (4.6 MT Of CPO).

Specifically for oleochemical and biodiesel products, the largest exports are to China (825,000 tons) followed by the EU (513,000 tons). Palm oil exports to Africa rose 11 percent in 2019 from 2.6 MT in the previous year to 2.9 MT and showed, an increasing trend from year to year.

These gave a positive signal for the challenging market of Indonesian palm oil products in 2019 which closed with challenges prices that jumped above $800 ton CIF Rotterdam and equalization of Indonesian palm oil import tariffs in India.

Entering 2020, Supriyono estimated that the production growth still slow due to drought and a cut of fertilizer use in 2019, which is likely to affect the crop yields. No further detail on the production targets in this year.

Indonesia is the largest CPO producer in the world. The palm oil industry is one of the Southeast Asia biggest economy’ major foreign exchange earners, contributing $3.5 billion to non-oil and gas exports in February.

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