Indonesia Palm Oil Association reported the country export recorded 36.18 million tons of palm oil in 2019 amid the declining demand from India, said the chairman today (02/03) - Photo by GAPKI Office

JAKARTA (TheInsiderStories) – Indonesia Palm Oil Association (GAPKI) reported the country export recorded 36.18 million tons (MT) of crude palm oil (CPO) in 2019 amid the declining demand from India and Europe, said the chairman today (02/03).

The amount rose by 4.2 percent compared to last year’ amount at 34.71 MT of CPO.  The chairman, Joko Supriyono explained, rising demand from China, the Middle East, and African markets has offset the declined from other countries.

According to him, 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.

Last year, Supriyono stated, Indonesia produced 47.1 MT of CPO and 4.6 MT of kernel oil. This amount is greater than 2018, with production of 43 MT of CPO and 4.3 MT of kernel oil. By the end of 2019, the country had around 4.6 MT of CPO reserves.

Entering 2020, he 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.

United States Department of Agriculture (USDA) forecasting Indonesia’ palm oil output at 43.0 MT of CPO during 2019 – 2020, amid the expanding the mature area. While, Industrial consumption for 2018 – 2019 is revised up to 6.8 MT supported by strong overseas demand.

Post maintains 2019 – 2020 palm oil domestic consumption at 13.11 MT, said the report. Trade data indicates that palm oil export from October 2018 to May 2019 rose 9 percent from the same period the prior year.

The rate of growth represents a decline of 12 percent from October 2018 to March 2019. Accordingly, palm oil exports for 2018 – 2019 are lowered to 28.5 MT.

Post forecasts 2019 – 2020 exports at 29.5 MT, a 1.0 MT increase from 2018 – 2019. Strong global vegetable oil demand, especially from China where declining supplies of domestically produced oil is increasing demand for imports, present growth opportunities and should offset high Indian import duties, the attache said.

Palm oil exports have begun to erode over the foreign policies on some of Indonesia’ main export destinations, especially to India, China, Bangladesh, and European Union. But, the agency rated, that some of the main export destination countries have enacted regulations that are included in the category of trade barriers, for an example India, which raises palm oil import tariffs to the maximum.

As known, the refined product import tariff from Malaysia is 45 percent of the applicable tariff of 54 percent. As a result of the discount on import duties enjoyed by Malaysia, the Indonesian palm oil market to India is increasingly eroded, because the Indian market is dominated by Malaysia.

GAPKI also sees that CPO prices are predicted to increase in the first quarter of 2020, influenced by the balancing of supply and demand conditions between global and domestic market. He adds, “This year, supply and demand are more appropriate and will be a fundamental factor in increasing prices.”

Indonesia is the largest CPO producer in the world. Based on data from the ministry of agriculture, the nation’ palm oil production in 2019 is projected to reach 51.44 MT of CPO, of which 42.87 MT is CPO and 9.57 MT in the form of kernel oil.

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