Indonesia palm oil output seen growing 10% in 2017

15.12.2016

Palm oil output in world No.1 producer Indonesia is expected to grow by around 10% in 2017 as planters devote more land to the crop, although the aftermath of last year’s El Nino weather pattern is likely to drag on yields.

That increase could pressure global prices for palm that have risen about 25% this year on worries over tight supply of the oil, used in everything from chocolate to cosmetics and biofuels.

Most respondents to a Reuters survey of seven planters and analysts in Indonesia predicted the 10% climb in output, with most growth coming in the second half of the year.

Indonesia is forecast to see production levels of 30-32 million tonnes this year, down from 35.5 million tonnes in 2015.

“The recovery will mostly come from new acreage, which will contribute almost a million tonnes to production,” said a Jakarta-based plantations analyst, declining to be identified as he was not authorised to speak with media.

“If we’re talking about yield, it has not yet recovered to the levels we saw in 2015,” he added.

Lingering effects from last year’s El Nino, which typically brings scorching heat to the region, are still hitting yields for palm.

The survey results reinforce similar predictions from analysts at an industry conference last month, when 2017 output was seen reaching 33-35 million tonnes.

Survey respondents expect the Kalimantan and Sumatra regions to see the strongest pickup in recovery.

“Most areas in Kalimantan have started to show improvements in production subsequent to being one of the areas most severely affected by the recent super El Nino,” said Franki Anthony Dass, plantations managing director at Sime Darby Bhd, which is the world’s largest palm oil planter by land size.

“Strong improvement can also be expected from central and north Sumatra.

Palm trees in all these regions have shown recovery from moisture deficit with good distribution of rainfall being experienced since April.”


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