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Jakarta Post

Palm oil exports higher than expected in first quarter

  • Linda Yulisman

    The Jakarta Post

  /   Sat, April 18, 2015   /  11:58 am

Exports of palm oil from Indonesia rose higher than expected in the first quarter as demand from main buyers,particularly China,increased significantly.

Shipments of palm oil, including crude and processed, climbed 13.7 percent to 5.6 million tons in the January-March period from last year as most key buyers, excluding China, purchased a higher volume of the commodity used to make a wide range of products, from cooking oil to cosmetics.

Indonesian Palm Oil Producers Association (Gapki) executive director Fadhil Hasan said on Friday that such a considerable increase was far higher than the association'€™s estimate.

The business group earlier expected exports from Indonesia, the world'€™s biggest palm oil producer, to gain only 2.5 percent to 22.3 million tons this year compared to last year as demand from two top buyers '€” China and India '€” would remain modest on the back of economic slowdown and a shift to other vegetable oils.

'€œThe first quarter result is quite surprising. But, as the price has stayed low, exports have expanded,'€ Fadhil told The Jakarta Post over the phone.

India led the market as purchases increased by 18.75 percent to 1.17 million tons in the first three months of the year. Bigger demand also came from new markets, such as Pakistan and the Middle East, which surged by 19.38 percent to 358,380 tons and by 19.42 percent to 579,470 tons, respectively.

Despite the positive growth, lower exports occurred in some main markets, including China and the EU. Shipments to China fell markedly by 35.27 percent to 531,890 tons, making it now the third-biggest destination after the EU.

Such a notable drop in China'€™s purchase is attributed to its shrinking economic growth to the lowest level in six years from January to March, curbing demand for primary commodities, including palm oil, to feed its manufacturing activities.

Palm oil delivery to the 28-member bloc gained 5.29 percent to 953,420 tons in the first quarter.

Fadhil said further that the business group was eyeing bigger exports in the second quarter, especially in growth markets, such as Pakistan and the Middle Easts, as people prepared stocks for the Idul Fitri holiday.

'€œHowever, the palm oil supply will largely depend on the government'€™s effort to absorb a higher volume of palm oil domestically,'€ he said.

Indonesia, the world'€™s top palm oil producer, recently decided to widen the use of biodiesel locally, raising the palm oil content in biofuel from 10 percent to 15 percent.

When the measure is carried out effectively, the biodiesel program can push up domestic consumption of palm oil by 5 million a year and reduce the fuel import bill by US$2 billion.

'€” JP/Linda Yulisman

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