Palm oil output may miss 2001 target: Gapki

JAKARTA (JP): The Indonesian Palm Oil Producers' Association (Gapki) said on Friday that crude palm oil production might miss the production target of 7.2 million metric tons this year due to the draught in several major producing areas.

Gapki chairman Derom Bangun said that the long draught and uncertain weather in oil palm plantation centers Sumatra and Kalimantan had disrupted the growth of oil palm fruits.

"We would've reached our 7.2 million ton production target this year, had it not been for the drought," he was quoted by Antara as saying.

He said the signs of a decline in production had been noticed since early this year where production between January and June had been lower than a year ago.

Derom did not specify the decline.

Derom predicted the uncertain weather condition would continue until the end of the year.

As the second largest CPO producer in the world, Indonesia is far behind its competitor, Malaysia, which produces 1.1 million tons of CPO a month, he said, adding that Indonesia's production is only about 600,000 tons a month.

The low output was one of the reasons why the government was considering increasing CPO export duty, currently set at 3 percent, to curb the flow of CPO exports.

The lack of CPO supply had caused the price of cooking oil to rise, Minister of Industry and Trade Luhut B. Pandjaitan said earlier.

The domestic shortage, he added, had worsened because the high rising CPO price in the world market, reaching $345 a ton this month from an average of $260 per ton last year, had induced more people to export their products.

"We need to strike a balance between domestic need and exports, so that cooking oil price would not rise steeply," Luhut said.

Separately, Minister of Agriculture Bungaran Saragih said that an increase in export duty was not a good idea at this time.

He said that Indonesian oil palm farmers had suffered from low prices during the past two years, and that now was the time for them to reap profits.

"At a time when prices (of CPO) are good, raising export taxes would only hurt farmers interests," Bungaran said.

The raising export duty on CPO was also counter to the government's efforts to increase foreign exchange earnings this year, he added.

In Malaysia, Reuters reported, palm oil futures extended losses on Friday as players took profits following bearish export figures for July 1-20 and uncertainties surrounding the release of key crop data.

At the close, the third-month October contract fell 41 ringgit to 1,147 ringgit ($301.84) per ton after trading as low as 1,145. Volume was at 1,791 lots.

In the physical market, July/August crude palm oil (CPO) for the southern and central regions was offered at 1,155 ringgit a ton against bids of 1,150 ringgit.

Deals were reported at 1,150 ringgit to 1,155 for both months and regions.

Among refined products, August/September RBD palm oil was offered at $322.50 a ton. There were offers for August/September RBD olein at $347.50, while August RBD palm stearin was offered at $247.50.

August palm fatty acid distillate was offered at $197.50. (tnt)