Indonesia, the world’s top palm oil producer, saw its production, export and domestic consumption of crude palm oil (CPO) drop in the month of May, the Indonesian Association of Palm Oil Producers (GAPKI) said,
The country’s CPO production in May dropped 1.9 percent compared to in April, at 3,616,000 tons. Domestic consumption also went down, by 1.6 percent to 1,380,000 tons, GAPKI said in a press release received by the Palm Scribe on Saturday (11/7.)
“This lower production is believed to be still caused by the effect of the long drought in 2019 and seasonal influences,” the GAPKI release said.
Indonesian CPO exports went down by 8.3 percent to 2,428,000 tons in May and the value of the exports also went down by 10.36 percent to $1.47 billion. CPO prices, meanwhile, also continued to show a weakening trend, dropping from an average of $564 per ton in April to $526 per ton Cif Rotterdam in May.
In the first five months of this year, CPO and palm kernel oil (PKO) production reached 19,001,000 tons or 14 percent down compared to the same period in 2019.
In the same period, export volumes went down buy 13.7 percent to 122,736,600 tons but in terms of value it showed a 5.5 percent increase to $8,437 million. Domestic consumption during the January-May 2020 period also increased, by 3.6 percent to 7,334,000 tons compared to the figure for the first five months of last year
“One of the reason for the higher consumption is oleochemicals which rose by 31,4 percent. Biodiesel consumption also increased, by 23.2 percent, supported by the government’s consistent policy regarding the implementation of the B30 program,” GAPKI said in the release.
Lower export was mostly experienced by refined palm oil which in general was caused by the small differences in prices between palm oil and soy bean oil.
The biggest drop happened to exports bound for Pakistan which in May only purchased 47,000 tons or down 23.4 percent while China imported 21 percent less at 87,700 tons. The European Union took in 81,500 tons or 16.62 percent less than in April while exports to India in May stood at 38,600 tons or 9.2 percent down from the previous month.
The drop in exports to China, one main market destination for Indonesian palm oil, may have been due to a substantial increase in oilseed crushing, especially of soy bean, and therefore leading to a high supply of vegetable oil there.
Despite these lower exports, some other export destination markets showed increased absorption of Indonesian palm oil. Exports to Egypt rose by 81 percent to reach 42,000 tons, to Ukraine export rose by 99 percent to 31,000 tons, to the Philippines it rose by 73 percent to 29,000 tons, to Japan it rose by 35 percent to 19,000 tons and to Oman exports rose by 85 percent to reach 15,000 tons.
GAPKI was of the opinion that economic activities in China, India and many other countries had begun to recover in Julya and thus demand for vegetable oil for their respective domestic needs could be expected to start to rise too.
The Indonesian economy was also beginning to recover and therefore demand for palm oil for food, oleochemicals and biodiesel is expected to rise.