JAKARTA Nov 3 Indonesian palm oil output will
climb 7 percent next year as trees mature, the chairman of an
industry body in the world's top producer said, although exports
will dip as domestic biodiesel demand rises.
Crude palm oil will rise to 31.5 million tonnes in 2015,
from 29.5 million tonnes this year, Derom Bangun, chairman of
the Indonesian Palm Oil Board told Reuters on Monday.
"Some plantations will increase productivity (in 2015) ...
as some of the plantations enter into a greater maturity," said
Palm plantation companies have been hit hard this year by
benchmark palm prices that dropped to their lowest in
more than five years at 1,914 ringgit ($577) a tonne in
Palm futures on the Bursa Malaysia Derivatives Exchange are
still down more than 12 percent so far this year at 2,333
ringgit, weighed down by high inventories as anticipated demand
from biodiesel consumption has lagged below targets and in the
absence of a forecast crop-damaging El Nino weather pattern.
Despite introducing ambitious regulations in August 2013
aimed at boosting the use of palm-based biodiesel, Indonesia is
set to miss its targets this year due to logistical and
Still, with domestic biodiesel demand expected to rise to
2.8 million tonnes in 2015, from 1.8 million tonnes this year,
Indonesia's crude palm exports will fall to 19.5 million next
year versus 20 million tonnes in 2014, Bangun said.
Biodiesel demand "will go even higher than 1.8 (million
tonnes) because it seems that the government is serious about
reducing fuel imports," said Bangun, whose group is an umbrella
organisation of major Indonesian palm oil associations and gives
policy recommendations to the government.
In an effort to fix budget and current account deficits that
are weighing on Southeast Asia's largest economy, President Joko
Widodo will make changes to the government's costly gasoline and
diesel subsidies before the end of the year.
Bangun estimated that Indonesian crude palm oil stocks were
currently 2.3 million-2.4 million tonnes, up from 2.1 million
tonnes at the start of the year.
But as dominant Southeast Asian palm producers enter the
monsoon season, which traditionally hinders supplies and
supports prices, Bangun forecast a range of 2,240-2,330 ringgit
for the rest of the year if inventories are unchanged.
Malaysian palm oil futures rose on Monday for a fifth
straight day, touching 2,345 ringgit, their highest in nearly
four months as the ringgit slid to a nine-month low.
A weak ringgit makes the commodity cheaper for holders of
other currencies and stimulates purchases by foreign investors
To remain competitive and stimulate buying interest to work
down inventories, Indonesia followed Malaysia and slashed its
monthly crude palm oil export tax from 9 percent in September to
zero for October and November.
Major palm oil firms operating in Indonesia include PT Sinar
Mas Agro Resources and Technology, Malaysia's Sime
Darby and Singapore-based Wilmar International Ltd
Palm oil is used mainly as an ingredient in food such as
biscuits and ice cream, and in the production of biofuels.
($1 = 3.3080 Malaysian ringgit)
(Editing by Tom Hogue)