Indonesia, currently the world’s largest palm oil producer, is expecting the sluggish growth of palm oil exports due to China’s slow economic growth and the ongoing economic uncertainty in Europe, according to the nation’s palm oil association.
The Indonesian Palm Oil Producers Association (Gapki) had earlier estimated total palm oil export shipments at 18 million tons, up by 2.2 percent from 17.6 million tons in 2011.
However, Gapki’s marketing head Susanto said on Monday that the association altered the palm oil export estimation to 17.6 million by the end of this year, down by 2.2 percent to the earlier estimation.
“Since exports in the first half of the year reached only 7.9 million tons from a total of 9.5 million tons of production, we lowered our export estimate for the whole year to 17.6 million tons [similar to the figure in 2011],” Susanto told reporters on the sidelines of a discussion in Jakarta.
He added that palm oil exports in the first half of the year usually accounted for 45 percent of
annual export shipments, which formed the basis of the association’s expectation that exports in the second half of the year would reach 9.7 million tons.
In June alone, Indonesia booked palm oil exports of 1.14 million tons, down by 16.5 percent from 1.36 million tons in May, as China’s weakening economy seemed to bite deeper, according to Gapki.
In the first quarter of 2012, China’s economic growth reached 7.6 percent, down by 0.2 percent from 7.8 percent, with China one of the world’s biggest consumers of palm oil.
“In addition, the ongoing economic uncertainty in Europe, another of our markets, also contributed to the slowing down of palm oil demand,” said Susanto.
In 2011, Indonesia exported 17.6 million tons of crude palm oil (CPO) and its derivatives, up by 3 percent from 17.08 million tons it booked in 2010.
Indonesia’s palm oil exports in 2010 were relatively similar to those it booked in 2009. Southeast Asia’s largest economy saw an 11 percent growth of palm oil exports in 2009 at 17.08 million tons, with 15.07 million tons exported in 2008.
In addition, Susanto said the association was planning to expand export destinations to nontraditional markets such as Russia, Bangladesh and Middle Eastern countries amid the economic situation in China and Europe.
“We are also hoping that the government can accelerate the talks with Pakistan so we can export more crude palm oil to the country. In the past, we exported 1 million tons of crude palm oil to Pakistan annually,” he said, referring to a preferential trade agreement (PTA) that Indonesia and Pakistan signed in September last year.
Meanwhile, commenting on the declining palm oil prices in recent weeks thanks to the slowing global economy, the association predicted that the CPO price would reach US$896 per ton in September, down from $920 per ton in August.
However, according to Susanto, the price, which normally ranged from $1,000 to $1,200 per ton, was expected to reach to near $1,000 per ton again in October due to annual festivals in China and India, two of the world’s top consumers of cooking oil, one of the derivatives of palm oil.
“The festivals in both countries, such as the Mooncake Festival in China, are expected to lift the CPO price again because of the rising demand of cooking oil during October,” he said. (asa)