RI palm oil 'to rise to 7.3m in 2001'

RI palm oil 'to rise to 7.3m in 2001'

KUALA LUMPUR (Dow Jones): Indonesia will produce 7.3 million metric tons of palm oil in 2001, up 12.3 percent from an estimated 6.5 million tons this year, Derom Bangun, chairman of the Indonesian Palm Oil Producers Association said.

In an interview with Dow Jones Newswires, Bangun said the increase will come mainly from new plantations coming under harvesting next year. Indonesia is estimated to have more than 200,000 hectares of oil palm maturing in 2001.

Bangun said he expects a 5 percent to 8 percent rise in palm oil prices in the coming months because of a slow down in production in December and January, but prices will stagnate once new Indonesian oil enters the market.

"Next month, there will be many holidays when harvesting will completely stop. That may affect production in the short term," he said, adding most plantations will stop regular operations from Dec. 23 to Jan. 3 because of a series of holidays.

"I expect a similar pattern this year as in 1986," he said about the possibility of a recovery in prices. According to him, palm oil prices were at their lowest in the middle of 1986, then recovered by the end of the year and remained firm until March 1987, but stagnated again after that.

"We will probably see the same thing this time. There may be a recovery in the coming months, but prices will flatten out by April," he said.

He said the average price in 2001 is likely to be lower than this year, because prices were still high in the beginning of 2000.

The price of crude palm oil is expected to average $250 a ton in 2000, down from about $380/ton in 1999.

Bangun said he expects a 5 percent to 8 percent rise in palm oil prices in the coming months because of a slow down in production in December and January, but prices will stagnate once new Indonesian oil enters the market.

"Next month, there will be many holidays when harvesting will completely stop. That may affect production in the short term," he said, adding most plantations will stop regular operations from Dec. 23 to Jan. 3 because of a series of holidays.

"I expect a similar pattern this year as in 1986," he said about the possibility of a recovery in prices. According to him, palm oil prices were at their lowest in the middle of 1986, then recovered by the end of the year and remained firm until March 1987, but stagnated again after that.

"We will probably see the same thing this time. There may be a recovery in the coming months, but prices will flatten out by April," he said.

He said the average price in 2001 is likely to be lower than this year, because prices were still high in the beginning of 2000.

The price of crude palm oil is expected to average $250 a ton in 2000, down from about $380/ton in 1999.