Indonesian palm output seen rebounding this year
JAKARTA: Palm oil output in Indonesia may rebound from the first decline in 18 years as more favourable weather helps plantations in the world’s biggest grower recover from the impact of a drought.
Production may rise to 35.5 million tonnes this year from 31.5 million tonnes in 2016, said Togar Sitanggang, secretary-general of the Indonesian Palm Oil Association. Output fell 3% last year because of the delayed impact of El Nino weather, the association, known as Gapki, said in a statement.
That was the first decline since the 19971998 crop season, according to data from the US Department of Agriculture.
Palm oil, used in everything from chocolate to lipstick and detergent, rallied 25% last year as the lingering impact of one of the most severe El Nino weather patterns on record crimped production, spurring a drawdown in inventories. While Gapki expects more favorable weather, Australia’s Bureau of Meteorology said five climate models show El Nino thresholds may be reached by mid-tolate winter. Australia’s winter starts in June.
“High rainfall in 2016 will help improve production this year as impact from El Nino fades away,” Sitanggang said here yesterday.
Output will also get a boost from crops planted in 2012-2013 that will mature this year, he said.
Total production that includes palm kernel oil will probably rise to 38.7 million tonnes this year, from 34.5 million tonnes in 2015, Sitanggang said.
Palm stockpiles in Indonesia dropped about 37% to 1.07 million tonnes in December from a month earlier, the lowest ever, Gapki Chairman Joko Supriyono said.
Production in December fell 8.3% to 3.15 million tonnes from a month earlier, while palm and kernel oil exports dropped 6% to 2.68 million tonnes, Gapki data show. Domestic consumption rose 3.5% to 1.01 million tonnes on higher usage of biodiesel, it said. – Bloomberg