Sharp decline in palm oil exports from Indonesia in September

28-Oct-2024 02:53 PM

Jakarta. The effect of the severe outbreak of El Nino during the 2023-24 season in Indonesia, the world's leading producer and exporter of palm oil, is now visible.

According to the data received, the total export of palm oil products from Indonesia during September 2024 declined to 17.90 lakh tonnes,

which was much less than the August shipment of 23.80 lakh tonnes and the September 2023 shipment of 22.80 lakh tonnes. The yield rate of oil palm in Indonesia is being affected due to the outbreak of El Nino weather cycle.

The apex trade body - Indonesia Palm Oil Association (Gapki) says that due to the reduced production of fresh fruit bunches (FFB) of oil palm, the production and stock of palm oil declined, while due to increased domestic use, less stock was available for export.

GAPK data shows that during the first eight months of the current year, i.e. January-August 2024, the total production of palm oil in Indonesia fell to 345.20 lakh tonnes, which was 17.70 lakh tonnes less than the production of 362.90 lakh tonnes in the same period of the year 2023.

Palm oil is being used heavily in the production of biodiesel in Indonesia and its mandatory blending level has been increased to 35 percent.

There is a plan to further increase it to 40 percent next year. As a result, the supply and availability of palm oil there is likely to become even more complicated. If the 40 percent blending plan is implemented, then 160 lakh tonnes of palm oil will start being used in biodiesel there.

With the implementation of the new plan, the consumption of palm oil will increase by 15-17 lakh tonnes, due to which there will be less stock for export and due to the lack of expected increase in production, shipments will naturally decline.

India is the biggest buyer of Indonesian palm oil and hence it may be affected the most. If exports from Indonesia decrease, Malaysia may get a good opportunity to increase its palm oil shipments.