Palm oil exports from the world’s largest producer Indonesia slid marginally by 3.7% in February against the previous month to 2.2 million tonnes, figures from the Indonesian Palm Oil Association (Gapki) showed.
The slide in exports was due to a combination of higher prices led by overall tighter global vegetable oil supply and sluggish production.
On a year-on-year basis, February’s palm oil exports – consisting of crude palm oil (CPO), processed CPO, palm kernel oil (PKO), oleochemicals and biodiesel – fell by 57.5%.
Exports to African markets in February fell by 54% against the previous month to 153,300 tonnes, while exports to Philippines fell by 55% on the month to 28,700 tonnes.
On the other hand, exports to key buyers India, China and Netherlands rose on the month by 16.1%, 21.7% and 42.2% respectively.
Indonesia’s palm oil production also fell by 9.3% to 3.8 million tonnes in February, with CPO and PKO production at 3.5 million tonnes and 329,000 tonnes respectively.
While Gapki noted that the lower production was considered seasonal, lower global vegetable oil production, particularly soyoil from South America, also contributed to higher overall prices.
“The average CPO price of CIF Rotterdam in February 2022 reached US$1,522 per tonne, US$164 higher than the January price of $1,358 per tonne, $469 per tonne higher than the February 2021 price of $1,053 per tonne,” Gapki said.
That has in turn led to lower consumption and exports.
Indonesia’s domestic palm oil consumption in February came in at 1.37 million tonnes, 9.3% less than January, with consumption for biodiesel taking up 52% of the demand at 710,000 tonnes.
This was followed by the food sector at 489,000 tonnes and marks the fourth month running where consumption for biodiesel exceeded palm oil demand for food.
High prices, especially in the food sector have continued to be a bugbear for Indonesia, and the government has rolled out several intervention policies since early this year to cap domestic palm oil prices, in particular cooking oil.
These include setting a price cap on domestic cooking oil and implementing a Domestic Market Obligation (DMO) on exporters where exporters had to reserve a portion of their exports for the domestic market.
The latest move, which came last month, saw the Indonesian government replacing the DMO with a higher export tax, removing price caps on packaged cooking oil and subsidising sales of bulk cooking oil to help alleviate the cost pressures.
Gapki also noted in its report that while weather conditions for palm oil production are expected to be normal this year, the current geopolitical scenario continues to create various uncertainties.
“Increasing efficiency and productivity efforts must be maintained,” Gapki said.
Finally, palm oil stock levels at the end of February came in at 5.04 million tonnes, 7.8% more than in January.
