Indonesia Palm Oil (Photo by: Pixabay)

JAKARTA (TheInsiderStories) – Indonesia`s exports of palm oil and derivatives dropped in the first quarter of 2018 compared to same period last year according to the Indonesian Association of Palm Oil Companies (GAPKI).

Exports of crude palm oil and biodiesel and oleochemicals dropped to 7.84 million tons in the first three months of this year from 8.02 million tons in the same period last year, Executive Director of GAPKI Danang Girindrawardana said.

Indonesia’s palm oil export performance, including biodiesel and oleochemical in the first quarter (Q1) of 2018 shrink by 2 per cent compared to the same period in 2017, Association of Indonesian Palm Oil said on Friday (25/05).

Indonesian palm oil exports dropped to 7.84 million tones in Q1 from 8.02 million tones particularly for crude palm oil (CPO) and its derivatives products such oleochemical and biodiesel. Total export of these produces decreased by 3 per cent to 7.5 million tones from 7.73 million tones last year.

Several factors affect the performance of Indonesian export is the presence of some of the trade barriers imposed by some countries. As we know European parliament has released resolution which accused the oil as a cause of deforestation, India raised import duties for vegetable oil, the United States launched accusations of anti-dumping biodiesel and China tighten oversight imported vegetable oils.

On the other hand, the performance of Indonesia’s palm oil production in the first quarter 2018 rose 24 per cent to 10.41 million tones from 8.4 million tones last year in the same period.

The production increased significantly last year since the industry still recovering from the drought experience in 2015 and it also began to produce a crop areas began to increase and the production remain elevated despite the many estates carry out rejuvenation of the garden.

The stagnation was also influenced by Indian’s government policy who has raised import duties of vegetable oil in early March to 54 per cent from 30 per cent and 40 per cent.

This policy eroded Indonesian palm oil exports 8 per cent to 408,650 tones in March  from 442,090 tones in February. The declining also happened to Bangladesh by 59 per cent, Middle East countries 30 per cent and Pakistan 0.5 per cent.

But in the some month, some countries export destinations Indonesian traditional markets such as EU, China, and the United States respectively recorded an increase of 38 per cent, 16 per cent and 11 per cent compared to February. The new markets of Africa also recorded a rise in imports by 38 per cent.

On the production side, in March the Indonesian palm oil production recorded an increase of 9 per cent to 3.65 million tones in March from 3.35 million tones in February. The increase due to a long working day and weather support.

With the still increasing production and export is relatively stagnant, Indonesia palm oils stocks posted a rise at 3.65 million tonnes at the end of March compared to February 3.5 million tones.

Talked about price, throughout March global CPO prices move in the range US$665 to $685 per metric ton with an average price of $676.2 per metric ton. Average price in March itself increased $13.1 compared February to $663.1 per metric ton

“Among the causes of the declining performance include restriction adopted by a number of importing countries,” Girindrawardana said.

He pointed to restriction by the European Union with Parliamentary resolution which accuses oil palm plantations of deforestation and increase in the import duty slapped by India on vegetable oils.

India raised its import duty on CPO to 44 per cent from 30 per cent earlier, and the import duty on refined palm oil was set at 54 per cent up from 40 per cent earlier. Exports of palm oil to India dropped 8 percent to 408,550 tons in March from 442,090 tons in February this year as a result of the rise in import duty.

In addition, the United States has launched biodiesel dumping allegation and China tightens control over imports of vegetable oils.

GAPKI said exports of crude palm oil and derivatives (not including biodiesel and oleochemicals) dropped 3 per cent to 7.5 million tons in the first quarter of 2018 from 7.73 million tons in the same period last year.

On the contrary, an increase was recorded in palm oil production, up 24 per cent to 10.41 million tons in the first quarter of 2018 from 8.4 million tons in the same period last year, thanks to favorable climate and expansion of plantations, despite replanting in many plantations.

A decline was also recorded in exports in the exports of palm oil to Bangladesh in March down 59 percent from the previous month. Similarly, exports fell 30 percent to Middle East and 0.5 percent to Pakistan.

However, increases were recorded in the exports in March to the country`s traditional markets including the European Union, China, and the United States respectively rising 38 percent, 16 percent and 11 percent from the previous month.

The price of CPO in global market in March, 2018 averaged rose to US$676.2 per metric ton from an average of US$663.1 per metric tons in the previous month.