PRESS RELEASE
Indonesian Palm Oil Association (IPOA)
Palm Oil Industry Is Facing Market Uncertainty
Entering the beginning of 2020, CPO prices increased to an average of USD 830 / ton Cif Rotterdam (January) compared to the average price in December 2019 which was USD 787 / ton. This opportune price is expected to be an encouragement for planters and palm oil companies to maintain their plantation better in order to get the highest productivity.
CPO production in January 2020 slightly increased compared to December 2019 production which was 3.48 million tons compared with 3.45 million tons. Domestic consumption also slightly increased from 1.45 million tons to 1.47 million tons (+ 1.8%) while exports dropped quite significantly from 3.72 million tons to only 2.39 million tons (-35.6%). The decline in exports occurred in CPO, PKO, biodiesel, while oleochemicals rose by 22.9%.
The decline in exports occurred in almost all destination countries, such as to China where the export fell off to 381 thousand tons (-57%), to the EU down to 188 thousand tons (-30%), to India drop to 141 thousand tons (-22%), and to the United States decreased to 129 thousand tons (-64%) while the export to Bangladesh rose by 40 thousand tons (+ 52%). The drastic drop in exports in January is likely due to the availability of stock in major importing countries, or importers awaiting market response to the B30 program implemented by Indonesia.
The current world economic political situation and the uncertainty of oil price due to the disagreement between OPEC and Russia as well as the corona pandemic that has hit almost every part of the world, causing a slowdown in global economic activity which results in a decrease in consumption of vegetable oil, especially imported vegetable oil. Regarding the corona pandemic, BNPB is worried that COVID-19 stress in the country will last until Eid, while many world experts estimate the peak of the corona pandemic to occur around May-June. This situation is feared to depress vegetable oil prices including palm oil.
In a few months, dry season will begin and land fires become a frightening specter. The use of fire in land clearing by the community must be avoided, despite the regulation that still allows the local community to do land clearing below 2 hectares. Palm oil companies need to strengthen synergy with relevant stakeholders and set up fire prevention facilities and infrastructure.
Efforts that have been made by palm oil companies in developing Community Fire Prevention, Village Fire Prevention and other programs need to be continuously developed by involving more formal and informal community institutions. With good collaboration and the involvement of more people, hopefully, the fire incidents will be avoided in 2020.
Jakarta, March 26 2020
Indonesian Palm Oil Association (IPOA)
More informations, contact:
Ir. Mukti Sardjono, M.Sc
Executive Director of IPOA
Phone. 021-57943871
Fax. 021-57943872
