TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

Palm oil exports H1 fall on weak demand

Palm oil exports tumbled in the first half (H1) of this year as demand from key destinations weakened, an industry group says

Linda Yulisman (The Jakarta Post)
Jakarta
Wed, July 23, 2014

Share This Article

Change Size

Palm oil exports H1 fall on weak demand

P

alm oil exports tumbled in the first half (H1) of this year as demand from key destinations weakened, an industry group says.

Exports of palm oil, including palm kernel, plunged by 7.7 percent to 9.8 million tons in January to June from the same period last year, according to the Indonesian Palm Oil Producers Association (Gapki).

Outbound shipment of the commodity to India, Indonesia'€™s top buyer, experienced the biggest drop of 37 percent to 2.12 million tons compared to last year.

Indian buyers preferred to purchase other edible oils, notably soybean or sunflower oils, causing the significant drop, Gapki executive director Fadhil Hasan said Monday evening.

Palm oil imports by India already slid in the first quarter (Q1) of this year as higher prices doused appeal, Bloomberg reported. Indian refiners favored crude soft oils over crude palm oil due to processing price disparity, according to the Solvent Extractors'€™ Association of India as quoted by the news wire.

Higher import duties on Indonesian palm oil this year might have also has a hand in weakening demand on the commodity, Fadhil said.

'€œThe rise in import tariffs make our palm oil less competitive compared to other edible oils,'€ he added.

India, the world'€™s top palm oil buyer, raised import taxes on refined palm oil in July 2012 to protect its refining industry and counter larger imports of derivatives from Indonesia, which has developed more processed products since 2011 with the support of an export tax structure benefiting the domestic downstream industry.

Slimmer orders were seen from China as buyers switched to soybean oil, as the price gap with palm oil had narrowed to less than $80 per ton, Fadhil further explained.

The association, however, did not provide the exports to China figures.

With the achievement in the first semester, the business group expects to sell between 19 million and 20 million tons of palm oil overseas this year, down by 10.4 percent from last year, according to Fadhil.

Gapki has anticipated that exports might remain stagnant at 21.2 million tons this year on the back of greater domestic absorption, triggered by the government'€™s policy to increase the biodiesel content in fuel blends.

Despite the grim outlook, better realized shipments might derive from stronger demand from main buyer countries opting to increase stocks for next year in anticipation of El Niño, Fadhil said.

'€œAccording to a regular pattern, demand usually climbs in the second semester,'€ he added.

Last month another business group, the Indonesian Vegetable Oil Refiners Association (GIMNI), estimated that drought as a result of the El Niño phenomenon, along with slash-and-burn practices in Riau province, could push down production by around 10 percent to 28 million tons.

{

Your Opinion Matters

Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.