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[Jakarta] Crude palm oil output in Indonesia, the world's top producer, is expected to fall 3 per cent in September, a survey of leading industry officials showed, easing due to dry weather conditions earlier in the year.
Palm production in Southeast Asia's largest economy was seen at a median 2.68 million tonnes in September, according to a Reuters survey of four Indonesian industry officials and plantation firms, versus 2.75 million tonnes in August.
"You could argue that a drought in the early part of the year is having a slight effect," said Chris de Lavigne, an analyst at Frost & Sullivan. "There was a slightly dry period in February which could be affecting the output right now." September and October are often peak periods for palm output in Southeast Asia, before output falls during the monsoon season in November and December when thunderstorms and flooding can delay harvesting and complicate transport of fruit to mills.
Indonesia is expected to produce around 30 million tonnes of palm oil this year and export around 20 million.
The median estimate for Indonesian crude palm oil (CPO) exports in September was 1.75 million tonnes, down from 1.72 million tonnes last month, while inventories were seen at 2.5 million tonnes versus 2.58 million tonnes in August.
In Malaysia, the world's No 2 palm oil producer, palm stocks roaw to their highest in 18 months at end-September to 2.09 million tonnes, industry data showed.
"You tend to find that Indonesian palm is a little bit cheaper and they were the first to put export tax down to zero, so maybe it's been flying off the shelves a little bit quicker,"added Mr de Lavigne.
Palm plantations firms have come under pressure this year after benchmark CPO prices fell almost 20 per cent, hurt by high inventories as anticipated demand from biodiesel consumption lagged below target and the absence of a forecast crop-damaging El Nino weather pattern.
In an attempt to remain competitive with rival grower Malaysia, Indonesia slashed its monthly CPO export tax to zero for October from 9 per cent in September. This is likely to be extended into November.
Major firms operating in Indonesia include Golden Agri-Resources, Wilmar International and Sime Darby Bhd. Top overseas buyers are India and China.
Transparent and reliable palm oil data is difficult to find in Indonesia. The Indonesian Palm Oil Association (GAPKI) publishes monthly data provided by a professional surveyor, that showed August exports fell 6.5 per cent to 1.72 million tonnes.
The Reuters survey included contributions from GAPKI, the Indonesian Palm Oil Board, the Indonesian Vegetable Oil Industry Association and PT Sinar Mas Agro Resources & Technology , one of the largest listed palm firms.
Palm oil is used as a cooking oil and in a wide variety products ranging from candies to cosmetics and soaps. It is also a popular "green" additive to fossil fuels.
Palm oil futures may end the year 2 per cent above current levels, but still down about 19 per cent for the year, a Reuters poll showed. REUTERS