JAKARTA – Indonesia’s palm oil export value this year is projected to reach at least US$ 34 billion, while its export volume is projected at 34.44 million tons.
The price of crude palm oil (CPO) in 2022 is estimated at around US$ 1,000 -1,250 per ton (Free On Board/FOB Indonesia) until the end of first semester 2022. During the period of January – October 2021, the realization of palm oil export value had already reached US$ 29.53 billion.
The Indonesian Palm Oil Association (GAPKI) projected that palm oil production in 2022 will reach 52.56 million tons. Domestic consumption will reach 20.1 million tons, or a growth of 7.13% from the projection in 2021 at 18.76 million tons, which will be driven by CPO consumption of the biodiesel industry that is estimated to grow by 13.96% to 8.34 million tons in 2022.
The increase of local consumption is predicted as the factor that will cause the growth of Indonesia’s palm oil export in 2022 at only 3.18% to 34.44 million tons from the projection in 2021 at 33.38 million tons.
GAPKI Secretary General Eddy Martono said that the growth of CPO production in 2022 is projected not as fast as that of 2021. It is due to a number of factors which include the difficulty of growers to access the fertilizers that will then affect their CPO production. The growers complained that due to the price increase of fertilizers they have to reduce the use of fertilizers. The irregularity of fertilizing will affect production, so that early this year the CPO production will slightly slow down.
Eddy noted that as a result, the increase of export in 2022 will not be too significant if compared to that of 2021. “But all will change if the prices of fertilizer will stable. Possibly, fertilizers will only be sufficiently available in the second quarter 2022 and could drive up the CPO production,” he told Investor Daily recently.
According to him, the export performance will also heavily depend on the recovery of importing countries’ economies from the impact of Covid-19 pandemic. “But generally, most of countries have seen economic recoveries this year, so that there is a possibility of export increase,” he said.
GAPKI predicted that the CPO price of around US$ 1,000 – 1,250 per ton will continue until the first semester 2022. The increase of demand due to the global economic recovery, without accompanied by the increase of production will strongly keep the high price of the commodity.
Previously, GAPKI Deputy Chairman III Togar Sitanggang said that the growth of Indonesia’s palm oil production in 2022 will not be as high as that of last year due to a shortage of new areas of replanting, dry season, and a number of plantation areas have not yet reached the harvest time.
“The high price of CPO will stay until the first semester 2022 at around US$1,000 – 1,250 per ton. Possibly, it will continue until the end of 2022. This is good news for our country, as it will increase state income from export,” said Togar.
Export market
Based on data from GAPKI, the largest export market of Indonesian palm oil is China, followed by India, European Union (EU-27), Africa, Pakistan, Middle East, USA, and Bangladesh. During the period of January-September 2021, Indonesia’s palm oil export to China reached 4.9 million tons, to India 2.99 million tons, to European Union 3.45 million tons, to Africa 2.41 million tons, and to Pakistan 1.99 million tons.
In 2020, its palm oil export to China reached 6.17 million tons, India 5.28 million tons, European Union 4.92 million tons, Africa 2.78 million tons, and Pakistan 2.5 million tons.
BV Mehta, Executive Director of Solvent Extractors’ Association of India, said that India’s consumption of palm oil surpassed 37% of its total consumption of vegetable oils at 8 – 8.5 million tons per year, while soybean was only at 22%. The largest consumer of palm oil in India is the hospitality industry, mainly hotels, restaurants, and cafes.
The government of India has adjusted the import tax of vegetable oils, including CPO and derivative products, in order to control the prices of local vegetable oils. The reduction of import tax of vegetable oils, including CPO, will be still effective until 31 March 2022. Indonesia is feared to lose its market share in India due to the relatively high export tariff at home.
During January-September 2021, India’s import of palm oil from Indonesia reached 3.11 million tons, while in 2020 its import from Indonesia reached 4.79 million tons, in 2019 at 5.05 million tons, in 2018 at 6.17 million tons, and in 2017 at 7.05 million tons. India is now trying to increase its local production of palm oil, although it will still need to import the oil.
“During the period of 2021-2022, India has planned to import 13 million tons of vegetable oils, of which CPO and CPKO will be around 7.7 million tons and RBD palm olein 0.1 million tons,” said Mehta.
Indian consumers of palm oil are very sensitive to the price and easily switch to other vegetable oils in a short time. (*)
Source : Investor Daily | Featured image via bpdp.or.id