Indonesia's Crude Palm Oil Output Seen Higher

Indonesia's crude palm oil (CPO) output likely rose 14 percent in July, according to a Reuters survey, its third straight month of growth as impact from last year's drought diminished. CPO production likely rose to 2.802 million tonnes in July from 2.464 million tonnes in June 2016, according to the median estimate in a survey of two industry associations, a state palm research firm and one of Indonesia's largest planters.

indonesian palm oil association

The respondents said output rose for a third month in a row after eight straight drops through April on the lingering impact of drought from last year's El Nino weather pattern. "The impact of El Nino in 2015 has subsided, and now we are having higher than normal rain volume during a dry season, which is positive for palm production," said Hasril Hasan Siregar, a director at the Indonesian Oil Palm Research Institute. Exports of Indonesian CPO for July were seen at 1.875 million tonnes, compared with 1.798 million tonnes a month earlier, according to the survey.

CPO stocks showed some recovery by rising 9.5 percent in July to 1.875 tonnes from 1.712 million tonnes a month earlier, the lowest since the survey started in August 2014. Indonesia's domestic consumption was expected to be around 1 million tonnes last month, compared with an estimated range of 600,000 tonnes to 920,000 tonnes domestic consumption in June.

Data from the Indonesian Palm Oil Association (GAPKI) showed the country exported 1.78 million tonnes of palm oil and palm kernel oil in June, edging higher from the previous month. GAPKI's data for July exports is not yet available.

The July survey comprises responses from GAPKI, the Indonesia Palm Oil Board, the Indonesian Oil Palm Research Institute, and PT Sinar Mas Agro Resources & Technology Tbk , one of Indonesia's largest listed palm oil companies.

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