JAKARTA, Nov 3 (Reuters) - 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 Bangun.
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 September.
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 infrastructure problems.
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 and refiners.
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)