JAKARTA: Crude palm oil (CPO) output from Indonesia, the world’s
largest producer, may grow at a slower pace of 4.5-5 per cent this year
as prolonged rains have affected yields, the country’s palm oil
association said on Friday.
Lower output from Indonesia could
offer support to palm oil prices, which have gained 1.5 per cent so far
this year, but hurt revenues for producers such as Astra Agro Lestari
and Wilmar.
“On average every year production grows about 10
per cent, but for this year I don’t think so because production may be
disturbed by extreme weather,” said Fadhil Hasan, executive director of
the Indonesian Palm Oil Association (GAPKI).
“Last year’s
production growth was 7.5 per cent from the previous year, for this year
I think the growth may be less than that, it could be around 4.5-5 per
cent only,” he said.
Indonesia CPO Output Growth to Slow on Rains
Wilmar, the world’s biggest listed palm oil firm that has
plantations in Indonesia, on Friday posted its first quarterly earnings
decline in four years, joining other commodity firms whose margins have
been squeezed by tight edible oil supply.
A bitter dispute
between the palm oil industry and environmentalists may also slow the
aggressive expansion of plantation firms.
Indonesia had earlier aimed to produce 22.5 million tonnes of CPO this year, from 20.6 million tonnes in 2009, Hasan said.
Indonesia’s meteorology agency (BMKG) in its latest forecast this
week said rains will continue until the end of this year because of the
La Nina weather anomaly, including in the commodity growing areas of
Sumatra, Kalimantan and Sulawesi. – Reuters
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