Indonesia’s palm oil output will show catch-up in late 2022, to enable the first rise in production in three years, encouraged by the boost to vegetable oil prices from the Ukraine war.
Crude palm oil output in the world’s top producing country will reach 47.0m tonnes in 2022, Joko Supriyono, chairman of Indonesian palm oil industry group Gapki, told a conference in Bali.
Eddy Abdurrachman, chief executive of palm oil fund BPDPKS, revealed an even higher estimate, of 48.23m tonnes.
The forecasts imply an increase from the 46.89m tonnes produced last year, on Gapki estimates, and represent the first increase since the 9.4% jump to the record 47.18m tonnes recorded for 2020.
Thursday’s production forecasts imply a marked acceleration in palm oil output, which as of August, the latest Gapki data available, was running 4.8% behind the year-before pace.
To meet the Gapki forecast for 2022, output would need to average 4.45m tonnes a month for the September-to-December period – a 10% increase year on year.
The BPDPKS estimate would mean a 17% surge over the four months.
Indonesian palm oil output typically reaches a seasonal peak around September, before retreating to a low around February.
Gapki also forecast Indonesia producing 4.8m tonnes of crude palm kernel oil this year, in addition to the crude palm oil figure.
‘A big influence’
Mr Joko told the conference that plantations had been encouraged to boost production by the lift to prices caused by Russia’s invasion of Ukraine, the top exporter of rival sunflower oil.
Noting too a short-lived Indonesian palm oil export ban introduced in April, in an effort to keep a lid on domestic cooking oil prices, and “with this situation, we can see that geopolitics and regulations in vegetable oil producing countries have a big influence on global trade”, he said.
Gapki forecast Indonesia’s palm export volumes reaching 30m tonnes this year, down from the 34.2m tonnes achieved in 2021, reflecting the hit from the export ban.
Kuala Lumpur palm oil futures – having soared by 10% in the first three days of the week – slipped by 1.4% to 4,339 ringgit a tonne on Thursday, undermined by the reassurance over Ukrainian sunflower oil exports offered by Russia’s return to the Black Sea grain export deal.