Thursday, 23 October 2014

Indonesian Palm Oil Reserves Shrinking But Exports Sluggish

Here is the excerpt from Bloomberg News and

Palm oil stockpiles in Indonesia probably slumped last month by the most since February 2013 as a dry spell reduced output in the largest supplier. Futures rose.

Inventories dropped 12 percent from August to 2.2 million metric tons, according to the median of six estimates from planters, traders, analysts and refiners compiled by Bloomberg. Production fell 9.8 percent to 2.3 million tons, the biggest decline this year, the median of five estimates shows.

“The effect from the drought at the start of the year has begun to materialize,” said Hariyanto Wijaya, a Jakarta-based analyst at Mandiri Sekuritas. “The first-quarter dryness, coupled with very dry conditions in September, have really hurt output. Production may have peaked,” he said by phone Oct. 17.

     Sept. 2014 (Survey)   Aug. 2014   Sept. 2013
Output           2.30         2.55        2.40
Stockpiles       2.20         2.50        2.23
Exports          1.70         1.72        1.64
NOTE: Figures are in millions of tons


Crude Palm Oil (CPO) Exports from Indonesia Sluggish on Weak Demand

Indonesian CPO exports to India, the world's largest importer of palm oil, fell 38 percent to 305,000 tons in September month-to-month (m/m). On a year-on-year (y/y) basis, Indonesian CPO exports to India have declined 26 percent to 3.3 million tons in the first nine months of 2014. This large decline is caused by India’s higher import tariffs for CPO, the depreciated rupee currency (versus the US dollar), and India’s high inflation.

Meanwhile, Indonesian CPO exports to China fell 31 percent m/m to 56,000 tons in September 2014, and declined 10 percent y/y to 1.60 million tons in the January-September period. China’s demand for Indonesian palm oil has fallen due to increased difficulty to obtain bank loans as well as the country’s new maximum residue limit standards.

Lastly, Indonesian CPO exports to the Eurozone have fallen 12 percent m/m to 302,000 tons in September 2014.

To end on a positive note, exports to the United States have increased 86 percent m/m to 68,800 tons in September. This is a remarkable development as the US soybean production is optimal thus leading to cheap prices of soybeans.

Indonesian Palm Oil Production and Export:

                                    2011  2012  2013  2014¹
(million metric tons)      23.5  26.5   27.0   25.0
(million metric tons)      16.5  18.1   21.2   21.1
(in USD billion)           20.2  21.6   19.0   18.9
¹ indicates forecast
Sources: Food and Agriculture Organization of the United Nations, Indonesian Palm Oil Producers Association (Gapki) and Indonesian Ministry of Agriculture