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Oil palm production falls only slightly despite severe drought
Despite a prolonged drought caused by the El Niño weather phenomenon, production of palm oil unexpectedly only fell by 3 percent to 34.5 million tons in 2016 compared to 35.5 million tons two years ago, the Indonesian Oil Palm Producers Association (GAPKI) revealed.
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A worker checks fresh oil palm fruit bunches on a truck soon after harvest for PT Wanasawit Subur Lestari in Pangkalan Bun, East Kalimantan. (JP/Dhoni Setiawan)
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espite a prolonged drought caused by the El Niño weather phenomenon, production of palm oil unexpectedly only fell by 3 percent to 34.5 million tons in 2016 compared to 35.5 million tons two years ago, the Indonesian Oil Palm Producers Association (GAPKI) revealed..
“It was pretty good in 2016 when we were initially worried about any drastic drop in production, but it turned out well,” said GAPKI executive director Fadhil Hasan.
The 34.5 million tons consisted of 31.5 million tons of crude palm oil (CPO) and 3 million tons of kernel palm oil (PKO).
The reserve stocks at the end of 2016, however, dropped drastically to 1 million tons compared to 4.5 million tons in 2015 because of a government policy requiring the use of B-20 biodiesel – a mixture of diesel and substances from CPO – that was activated in 2016. Some 2.8 million tons of CPO were used in the mixture.
(Read also: Palm oil product exports to EU to rise despite 'negative campaign')
The increase in demand for biodiesel and from the food industry amidst an increasing global population also jacked up CPO prices last year.
GAPKI noted CPO prices were weak in the beginning of 2016 at US$557 per metric ton (MT), but they kept recovering to more than $750 in May, the first time since August 2015, and ended at $790 per MT at the end of 2016.
The average CPO price in 2016 was $700 per MT, higher than the $614 per MT in 2015. (bbn)
