Press Release
Indonesian Palm Oil Association (IPOA)
Production Drop Pushes Up Prices
The production of crude palm oil (CPO) in January 2022 was estimated at around 3.863 million tons or around 3% lower than the production in December 2021, while the production of palm kernel oil (PKO) reached around 365 thousand tons or around 3.9% lower than its production in December 2021. The production drop in January 2022 is a seasonal pattern, but the production drop of CPO from December 2021 to January 2022 at 3% was much smaller than the seasonal production drop from December 2020 to January 2021 which reached 7%.
The import of palm oil products in January 2022 reached 5.1 thousand tons from Malaysia, consisting of 4.8 thousand tons in oleochemical and 316 tons in PFAD. With a final stock in December at 4.129 million tons, then total supply amounted to 8.363 million tons. In addition to that, there was an import of “soft oil” at 5.5 thousand tons, mostly from Malaysia (2.3 thousand tons) and from Thailand (1.5 thousand tons) in the form of soybean oil at 3.3 thousand tons, sunflower oil at 0.5 thousand tons and other soft oils at 1.7 thousand tons.
Total local consumption of palm oil in January 2022 reached 1.506 million tons or 160 thousand tons lower than the local consumption in December 2021 at 1.666 million tons or a decrease of 9.6%. The largest consumption was seen for biodiesel at 732 thousand tons, followed by consumption for food industries at 591 thousand tons and for oleochemical at 183 thousand tons. The higher palm oil consumption for biodiesel than for foods has been seen since November 2021.
The export of palm oil in January 2022 reached 2.179 million tons, which decreased by 11.4% from that of December 2021 at 2.460 million tons and lower by 23.8% than the export in January 2021 at 2.861 million tons. The export drop from December 2021 to January 2022 was seasonal pattern, but this time it is also seen as a result of the very limited production and very high price. The largest export change was seen to China at -149 thousand tons (-172 thousand tons from drop of Refined PO), Pakistan at -108 thousand tons (-139 thousand tons from drop of Refined PO), and India at +97 thousand tons (+126 thousand tons from import increase of Refined PO).
With the production, import, consumption and export mentioned above, stocks of palm oil and palm kernel oil by the end of January 2022 rose to 4.678 million tons from 4.129 million tons in early January. The conflict of Russia-Ukraine has pushed up the prices of oil to more than US$100/barrel, which will financially burden the Indonesian economy and other foreign economies. During the first semester 2022 the vegetable oil market will see supply deficit, especially because the conflict will affect the supply from Ukraine as one of the major producers of sunflower and rapeseed.
As a result, prices of vegetable oils will rise and make the palm oil as the main substitute for the importing countries. Therefore, the government needs to wisely manage the local use and export of palm oil to stabilize the national trade balance. Growers should continually increase their efficiency and productivity.
Jakarta, 11 March 2022
Indonesian Palm Oil Association (IPOA)
For further information, please contact:
Mukti Sardjono
Executive Director GAPKI
