Indonesia CPO export revenue down 30%

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)