Indonesia forecast that it would miss a target for output of palm oil this year because of dry weather, exacerbating a shortage of the commodity that has helped drive the price to a record.
â€śLast year, our production was around 16 million tons and this year the prediction was 17, but because of weather conditions, it's going to end up about 16.8,â€ť Trade Minister Mari Pangestu said. Still, output this year is still at a record.
â€śThe main concern is the supply,â€ť said Ben Santoso, an analyst at DBS Vickers Securities Indonesia. â€śWe don't think demand is going to slow down, which is why prices won't come off very much.â€ť
â€śPrices will not plummet or go up too high, but it's not going to come down from where we are now for too much,â€ť Pangestu was quoted as saying by Bloomberg News in an interview on Tuesday (16/10/07). â€śA lot depends on the price of oil itself, crude oil, fossil fuel, and that's at the moment relatively high.''
The minister's figures tally with those from Derom Bangun, head of the Indonesian Palm Oil Association. Output this year would be 17 million tons, Bangun said last August 29, trimming an initial forecast made in May for output of 17.4 million tons. He has forecast an output of 18.4 million tons for 2008.
â€śWe're obviously looking to expand production, not by clearing land, but finding land that is already cleared,â€ť Pangestu said.