Indonesia CPO export revenue down 30%
JAKARTA (JP): Indonesia crude palm oil (CPO) export revenue between January and April this year fell by around 30 percent compared with the same period last year, as a plunge in world CPO demand pressured prices, the government said on Tuesday.
Minister for Industry and Trade Luhut B. Pandjaitan put no figure on Indonesia's CPO export revenue.
But CPO output last year was some 6.5 million tons, and an estimated 7.5 million tons this year. Indonesia exports around half of its CPO production.
"In the early months of this year we saw CPO prices sink to about US$200 a ton," Luhut told reporters on the sidelines of a hearing with the House of Representatives' Commission V for industry and trade affairs.
Oversupply and competition from its substitute, soybean oil, caused CPO prices to fall from 1999.
Last year CPO prices averaged $260 per ton, as against a hefty $700 per ton in 1998.
But Luhut said he was confident Indonesia could make up the losses on the back of recovering CPO prices and higher demand.
"Because prices are improving, as well as demand, I think we can recover the shortfall (in CPO export revenue)," he said.
Right now, he said, CPO prices have recovered to around $240 per ton.
Early this year, the world's two largest CPO producers Indonesia and Malaysia, announced an alliance to prop up CPO prices and demand.
The two countries, which control about 90 percent of world CPO production, said they would lobby giant CPO consumers India and China to import more CPO.
They would ask India to lower its import tariffs on CPO, and China to raise its palm oil export quotas.
Luhut said the government took up the task of lobbying the two markets, as local businessmen lacked aggressiveness in marketing their CPO products.
He said he recently met Chinese officials to persuade them to raise Indonesia's CPO export quota.
Judging from the meeting he had, Luhut said he was confident the Chinese government would grant Indonesia another 500,000 tons to 600,000 tons in CPO export quotas.
"China is likely to raise the current quota by 1.2 million tons to between 1.5 million to 1.6 million tons," he said.
According to him, China was close to meeting Indonesia's request as demand for CPO in that country was growing.
Indonesia's alliance with Malaysia also identified new palm oil markets in countries such as the former Soviet Union, including Ukraine, and Georgia.
Besides joint marketing efforts, the two countries agreed to a joint campaign, research and development efforts for palm oil.
But chairman of the Indonesian Palm Oil Producers' Association (Gapki) Derom Bangun remained skeptical about the cooperation's success.
In April, he predicted that oversupply would continue to threatened CPO prices, despite a pact between Malaysia and Indonesia.
He said efforts to curb supply in the market would fail, as CPO production in the two countries continued to increase.
According to him, the oversupply would cause palm oil prices to remain low, at about $260 per ton at least until next year.
India's move to restrict imports of palm oil products would drive much of Indonesia and Malaysia's CPO products into other markets, driving prices down further.
He said that lacking in concrete action, the cooperation would have little impact on the market.(bkm)