The Palm Scribe

Indonesian Palm Oil Exports Drop 6 percent in the First Semester 2018

Indonesia’s exports of palm oil and its derivatives, excluding oleochemicals and biodiesel, dropped by six percent to 14.6 million tons in the first half of 2018 compared to the same period in the previous year, the Indonesian Association of Palm oil Producers (GAPKI) said on Tuesday(21/8).


If oleochemical and biodiesel exports are included, the total figure would be 15.30 million tons or down two percent compared to the same period last week, GAPKI said in a press release published on its official website.

The release also said that Indonesia’s palm oil output in the first half of the year rose to 22.32 million tons or up 23 percent compared to the previous year.  Conducive weather and the waning effects of the El Nino freak weather phenomenon were cited as reasons for the rise.

In the first six months of this year, Indonesia’s export of CPO and its derivatives to one of its major market, India, showed a 33.16 percent plunge compared to the same period last year, to just 2.50 million tons.

“The undermining of the Indian market was mainly due to the high import duty slapped on its import of palm oil under the argument of protecting its domestic refining industry,” GAPKI said in the release.

GAPKI  also added that the issue of deforestation and the policy of the European Parliament to phase out food-based biofuel had also in a way affected the market for Indonesian palm oil in the European Union..

The European Union imports of CPO and its derivatives from Indonesia dropped by 12 percent in the first half of the year to just 2.39 percent. A drop in imports of Indonesian palm oil was also seen in Africa which absorbed 10 percent less palm oil, GAPKI said.

However, rising exports of Indonesian CPO and derivatives in the first half of 2018 was seen in China which took 23 percent more compared to the first six months of 2017 with 1.82 million tons. GAPKI attributed the increase to the lowering of added value tax for vegetable oils , from 11 percent to 10 percent that took effect as of May 1, 2018.

“Besides that, the escalation of the trade war between the Bamboo Curtain and Uncle Sam also contributed to influence demand for crude palm oil and its derivatives,” the GAPKI release said, adding that for the first time since the trade war erupted, China imported biodiesel from Indonesia. 185,860 tons in June.

The United States also booked rising imports of CPO and its derivatives from Indonesia 13 percent more than in the first half of 2017 reaching 611,080 tons.

But the piling up of soybean because of the trade dispute with China may at the end, stifle US imports of vegetable oil sometimes in the future.

Increases in imports of Indonesian palm oil and derivatives during the first six months of 2018 were registered in Bangladesh, which rose by 31 percent, Pakistan 7 percent, and Middle Eastern countries by 4 percent.

For the month of June 2018, CPO export volume and that of its derivative posted a 7 percent increase compared to May 2018 at 2.29 million tons,. India, surprisingly, boosted its import of CPO derivatives from Indonesia by 95 percent to 467,810 tons, The drastic increase was attributed to the pressure of demand to meet domestic needs after the scarcity that followed the application of the high import tariff for vegetable oils earlier in March.

June saw China increase its import of Indonesian CPO and derivatives by 45 percent,  the European Union by 24 percent, the United States by 9 percent and Pakistan by two percent.

CPO and PKO productions in June 208 are estimated to have weakened by 7 percent compared to May the same year, at 3,95 million tons, Although June exports as a whole showed improvements, it still failed to lower stocks. The palm oil stock had its highest level in June at 4.85 million tons.

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