Oilseeds and Products Annual

An Expert's View about Cereals, Leguminous Crops, Oil Seeds in Indonesia

Posted on: 23 Apr 2012

Indonesian crude palm oil (CPO) production reached 23.6 million metric ton (MMT) in marketing year (MY) 2010/2011.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 4/11/2012 GAIN Report Number: ID1210 Indonesia Oilseeds and Products Annual 2012 Approved By: Dennis Voboril Prepared By: Jonn Slette/Ibnu E Wiyono Report Highlights: Post expects that the forest moratorium implemented in 2011 will not broadly impact Indonesia?s crude palm oil production (CPO) during the next two marketing years. Indonesian CPO production reached 23.6 million metric ton (MMT) in marketing year (MY) 2010/2011. The production will increase to 25 MMT in MY 2011/2012; and 26.4 MMT in MY 2012/2013. Ninety percent of the additional CPO production derives from expanded production areas, with yield improvement accounting for the remaining 10 percent. Estimated CPO production figures imply that Indonesia will produce 109 MMT of fresh fruit bunches (FFB) in MY 2011/2012; and 116 MMT of FFB in MY 2012/2013. Thus, Indonesia is expected to produce 6.55 MMT of palm kernel (PK), 2.9 MMT of palm kernel oil (PKO), and 3.55 MMT of palm kernel meal (PKM) in MY 2011/2012 and 7 MMT of PK, 3.13 MMT of PKO, and 3.8 MMT of PKM in MY 2012/2013. Indonesian copra production will slightly increase from 1.46 MMT in MY 2010/2011 to 1.48 MMT in MY 2011/2012 due to supportive weather. Should the weather remain supportive in current marketing year, copra production will further increase more significantly to 1.6 MMT in MY 2012/2013. Estimated copra production figures conclude that Indonesia will produce 900,000 metric ton (MT) of coconut oil (CNO) and 475,000 MT of copra meal (CM) in MY 2011/2012 and 970,000 MT of CNO and 495,000 MT of CM in MY 2012/2013. Indonesian soybean meal (SBM) consumption will increase from 3 MMT in MY 2010/2011 to 3.3 MMT in MY 2011/2012 due to higher animal feed production. Post predicts a further increase in SBM domestic consumption to 3.5 MMT in MY 2012/2013. Commodities: Oil, Palm Production: Indonesian CPO production is predicted to increase from 23.6 MMT in MY 2010/2011 to 25 MMT in MY 2011/2012. Post predicts that CPO production will further rise to 26.4 MMT in MY 2012/2013. Ninety percent of increased CPO production derives from area expansion, with the remaining ten percent attributed to minor yield improvements. Area Harvested Indonesian oil palm area harvested is predicted to increase from 6.59 million hectares in MY 2010/2011 to 6.93 million hectares in MY 2011/2012. The area harvested will further increase to 7.28 million hectares in MY 2012/2013. Calculations of Indonesian oil palm area harvested growth takes into account the following variables: Planted area growth from 1970 to 2010. The timeframe indicates that the forest moratorium, which has been implemented since 2011, has not impacted oil palm area harvested expansion in MY 2011/2012 and MY 2012/2013. During the typical life of an Indonesian oil palm tree, harvest begins during the fourth year and ends around the 25th year. The impact of the forest moratorium on oil palm planted area growth will likely become more apparent in MY 2013/2014. The data released by the Government of Indonesia?s (GOI) survey of annual crop damage by area cover the years between 1999 and 2010. Data from 1998 and years prior are currently not available. Yield Smallholder yields have become a major challenge to maintaining robust growth of Indonesian CPO production. Smallholder yields are trending up, but levels are still below the previous nine years, per the national average. The performance of smallholder planters is expected to stay below the curve over the next two marketing years. Source: Indonesian Palm Oil Statistic 2011 and Post?s Estimation Post analyzes the factors that lead to productivity gaps among smallholder, private, and state-owned oil palm plantations. The analysis looks at three key factors which contribute to high-yield oil palm crops, to include 1. maturity profile, 2.the adoption of best management practices (BMP), and 3. the quality of planting materials. While weather and soil types are also critical, they are excluded from the current analysis for the sake of brevity. Results of assessment are summarized in the matrix below: Factors contribute to Contribution to yield improvement in oil palm plantation by yield improvement category Smallholders Private State-Owned Maturity Profile Supportive Less Supportive Supportive Best Management Less Supportive Supportive Supportive Practices Planting Materials Less Supportive Supportive Supportive The standard yield curve suggests that oil palm trees will enter peak production levels during years 8 ? 13. A larger area harvested, during production peaks, should result in higher CPO yields. Post estimates that the percentage of Indonesia?s oil palm trees will be in peak production in MY 2011/2012 and MY 2012/2013 per the table below: Marketing Year Smallholders Private State-Owned 2011/2012 46 % 16% 38% 2012/2013 46 % 17% 40% The table indicates that smallholders and state-owned plantations should see positive yield growth due to a larger share of trees coming into peak production. Smallholder yields, however, should remain below national average, due to lower BMP adoption and widespread use of low quality oil palm seeds. Post estimates that 940,000 hectares of smallholder oil palm planting area were planted with low quality seeds during the1999-2003 timeframe1. Smallholders manage 3.08 million hectares of planting area in 2010. Estimates indicate that 30 percent of total smallholders? areas were planted with low quality seeds in 2010. Source: Indonesian Palm Oil Statistic 2011 and Post?s Estimation Private plantations have a smaller share of area harvested during the peak production period. The adoption of high level of BMP and the use of certified oil palm seeds, however, help them to register higher yield than that of smallholder plantations. State-owned oil palm plantations register the highest yield as the three key components that are required to produce high yield crops are supportive. Their contribution to national average yield, however, is 1 The estimation is based on methodology developed by researchers from one of Indonesian major palm oil producers and Bogor Agricultural University (IPB). Simulated annual planting area growth is obtained by dividing annual oil palm seed sales volume from 1997 to 2009 by standard seed requirement of 200 seeds per hectare. Actual annual planting area growth refers to government official data from 1998 to 2010. Oil palm seeds need to be planted in nurseries for 6 ? 12 months before they can grow in the field. This agronomical characteristic explains the difference in timeframe between oil palm seed sales volume and actual planting area data. minor as their harvesting area accounts for less-than 4 percent of the total oil palm harvesting area in Indonesia. Consumption: Domestic users consume both CPO and refined palm oil (RPO) products. Refineries and feed manufacturers are the direct user of CPO. Producers of palm oil based food and industrial products can directly use CPO and/or use RPO produced by refineries. Food manufacturers use RPO such as olein, stearin, and palm fatty acid distillate to produce cooking oil, shortening, and margarine. Oleochemical producers use RPO products to make fatty acid, fatty alcohol, and glycerol. Biodiesel makers also process RPO products into fatty acid methyl ester. Growing domestic demand for palm oil based food products, animal feed, oleochemical products, and continuous government support to Indonesia biodiesel program will increase domestic use of palm oil in Indonesia. Post predicts an increase of Indonesian palm oil domestic consumption from 6.77 MMT in previous marketing year to 7.26 MMT in MY 2011/2012 and 7.71 MMT in MY 2012/2013. Trade: Combined Indonesian exports of CPO and RPO decreased by 3.21 percent in 2010 over 2009, from 16.83 MMT to 16.29 MMT respectively. In 2011, RPO exports rebounded slightly with a 0.92 percent increase to 16.44 MMT. The data indicates that Indonesian RPO export levels have been relatively stagnant over the past three years. Stagnant Source: GTIS Post predicts that Indonesia will export 17.5 MMT and 18.5 MMT of palm oil in MY 2011/2012 and MY 2012/2013 respectively. The following factors will be critical in determining whether Indonesian palm oil exports reach the predicted level: 1. The development of export infrastructure development must keep up with strong palm oil production growth. 2. The pace of domestic consumption growth. 3. The Pakistan-Indonesia FTA and its impact on Indonesian palm oil exports to Pakistan. Palm oil producers in Kalimantan face the toughest logistical challenges in exporting their products. They produced 4.79 MMT of palm oil in 2010. Export volumes however, stand at only 18 percent of total production. By contrast, Sumatran producers exported 86 percent of their production in the same year. As mentioned in the March 2012 Indonesian Oilseed Update, the most significant palm oil ports for exporting are located in Sumatra. Sumatran palm oil producers can use big vessels with the capacity to carry 40,000 MT of palm oil. Producers in Kalimantan, however, can only use small vessels as Kalimantan has not yet developed deep water seaports. The limited export capacity of the seaports in Kalimantan is reflected in monthly palm oil export traffic data. The graphic below shows that average monthly palm oil export volume of six seaports in Kalimantan reached 12,000 MT in 2010. The volume is smaller compared to palm oil export traffic in Sumatran non-major seaports that reached 14,000 MT per month in the same year. Note: red bar refer to major palm oil port of exports in Indonesia Source: Indonesian Palm Oil Statistic 2011 (recalculated) Palm oil producers in Kalimantan have several options available for overcoming the limited infrastructural capacity of the seaports: 1. Ship palm oil to Sumatra and export via major seaports (Dumai and Belawan). This option subjects Kalimantan shippers to high domestic shipping costs. 2. Exporting palm oil via Tawau seaport in Sabah, Malaysia. 3. Focus on satisfying domestic demand in Kalimantan and Java. Of which 82 percent palm oil production in Kalimantan was consumed domestically in 2010. The figure suggests that the third option is currently the most optimal strategy for Kalimantan palm oil producers. There are 44 cooking oil manufacturers and three big oleo-chemical producers operated in Kalimantan and Java. It is more efficient for Kalimantan palm oil producers to focus on supplying those manufacturers and producers. The provincial government of East Kalimantan initiated the development of an International Industrial Zone and Seaport of Maloy in 2010. It has since allocated 22 billion rupiah to secure the land for the seaport. Development of Maloy is expected to create a significant increase in Kalimantan?s capacity to export palm oil. However, completion of the project may take years as it requires significant funding support from the GOI and large private sector involvement. Stocks: Export logistical challenges, combined with growing palm oil production, is expected to increase ending stock level from 672,000 MT in MY 2010/2011 to 945,000 MT in MY 2011/2012 and 1.17 MMT in MY 2012/2013. Production, Supply and Demand Data Statistics: Oil, Palm Indonesia 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 0 0 0 0 0 Area Harvested 0 6,590 0 6,930 7,280 Trees 0 988,500,000 0 1,039,500 1,092,000 Beginning Stocks 242 242 798 672 945 Production 23,600 23,600 25,400 25,000 26,400 MY Imports 23 23 35 33 35 MY Imp. from U.S. 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 Total Supply 23,865 23,865 26,233 25,705 27,380 MY Exports 16,422 16,423 17,950 17,500 18,500 MY Exp. to EU 4,100 2,133 4,500 2,820 2,900 Industrial Dom. Cons. 1,700 1,565 2,150 2,000 2,200 Food Use Dom. Cons. 4,775 4,785 4,800 4,800 5,000 Feed Waste Dom. Cons. 170 420 176 460 510 Total Dom. Cons. 6,645 6,770 7,126 7,260 7,710 Ending Stocks 798 672 1,157 945 1,170 Total Distribution 23,865 23,865 26,233 25,705 27,380 1000 HA, 1000 TREES, 1000 MT Commodities: Oilseed, Palm Kernel Production: FFB yields determine domestic production levels of PK. Estimated CPO production figures of 25 MMT in MY 2011/2012 and 26.4 MMT in MY 2012/2013, in combine with a 23 percent of oil extraction rate (OER) assumption, suggest that Indonesia will produce 109 MMT of FFB in MY 2011/2012 and 116 MMT of FFB in MY 2012/2013. PK accounts for about 6 percent of total FFB weight. Production of PK, therefore, will reach 6.55 MMT in MY 2011/2012 and 7 MMT in MY 2012/2013. Consumption: PK mill plants process their supplies into PKO. Post predicts that they will process 6.45 MMT and 6.95 MMT of PK in MY 2011/2012 and MY 2012/2013 respectively. The rest of PK supply ends up as an ending stock. Stocks: Ending stocks of palm kernel will increase from 165,000 MT in MY 2011/2012 to 215,000 MT in MY 2012/2013. Production, Supply and Demand Data Statistics: Oilseed, Palm Kernel Indonesia 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 0 0 Area Harvested 3,750 6,590 4,050 6,930 7,280 Trees 0 988,500,000 0 1,039,500 1,092,000 Beginning Stocks 40 40 65 65 165 Production 6,200 6,200 6,700 6,550 7,000 MY Imports 0 0 0 0 0 MY Imp. from U.S. 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 Total Supply 6,240 6,240 6,765 6,615 7,165 MY Exports 0 0 0 0 0 MY Exp. to EU 0 0 0 0 0 Crush 6,105 6,175 6,525 6,450 6,950 Food Use Dom. Cons. 0 0 0 0 0 Feed Waste Dom. Cons. 70 0 80 0 0 Total Dom. Cons. 6,175 6,175 6,605 6,450 6,950 Ending Stocks 65 65 160 165 215 Total Distribution 6,240 6,240 6,765 6,615 7,165 1000 HA, 1000 TREES, 1000 MT Commodities: Oil, Palm Kernel Production: PK supplies dedicated to palm kernel mill determines production of PKO. As mentioned above, Indonesia will crush 6.45 MMT and 6.95 MMT of palm kernel in MY 2011/2012 and MY 2012/2013 respectively. Oil content of palm kernel that can reach 45 percent suggests that Indonesian PKO production will reach 2.9 MMT in MY 2011/2012 and 3.13 MMT in MY 2012/2013. Consumption: Domestic consumption of PKO is predicted to increase from 1.2 MMT in MY 2010/2011 to 1.45 MMT in MY 2011/2012. Post predicts a further increase of PKO consumption to 1.65 MMT in MY 2012/2013. Trade: Large increase in domestic consumption will lead to slow PKO export growth. The historical data shows that Indonesian PKO exports are declining in the last three years. Post predicts a minor increase in PKO exports, from 1.467 MMT in MY 2010/2011 to 1.5 MMT in MY 2011/2012 and 1.55 MMT in MY 2012/2013. Source: GTIS New export duty scheme (implemented in August 2011) imposes lower tax rates for refined PKO products (please see Indonesian Oilseed Update November 2011 for detailed explanation of new export duty scheme). The scheme, therefore, will theoretically encourage higher exports of refined PKO products. Export share of refined PKO increased from 15% in 2010 to 24% of total PKO export in 2011. Stocks: Post predicts a decrease of PKO ending stock in the next two marketing years due to strong domestic consumption growth. Stock will decrease from 325,000 MT in MY 2010/2011 to 280,000 MT in MY 2011/2012. Stock is expected to further decrease to 215,000 MT in MY 2012/2013. Production, Supply and Demand Data Statistics: Oil, Palm Kernel Indonesia 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Crush 6,105 6,200 6,525 6,450 6,950 Extr. Rate, 999.9999 0 0 0 0 0 Beginning Stocks 200 200 295 325 280 Production 2,680 2,790 2,860 2,900 3,130 MY Imports 2 2 2 5 5 MY Imp. from U.S. 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 Total Supply 2,882 2,992 3,157 3,230 3,415 MY Exports 1,467 1,467 1,540 1,500 1,550 MY Exp. to EU 550 371 550 375 380 Industrial Dom. Cons. 850 970 1,082 1,150 1,300 Food Use Dom. Cons. 270 230 285 300 350 Feed Waste Dom. Cons. 0 0 0 0 0 Total Dom. Cons. 1,120 1,200 1,367 1,450 1,650 Ending Stocks 295 325 250 280 215 Total Distribution 2,882 2,992 3,157 3,230 3,415 1000 MT, PERCENT Commodities: Meal, Palm Kernel Production: Similar to PKO, PK supplies going to palm kernel mill determines production of PKM. As mentioned in the palm kernel oilseed section, Indonesia will crush 6.45 MMT and 6.95 MMT of palm kernel in MY 2011/2012 and MY 2012/2013 respectively. The pressing of palm kernel will produce 45 percent of oil and 55 percent of meal. Indonesia, therefore, will produce 3.55 MMT and 3.8 MMT of PKM in MY 2011/2012 and MY 2012/2013 respectively. Consumption: Post predicts an increase in PKM domestic consumption from 350,000 MT in MY 2010/2011 to 396,000 MT in MY 2011/2012 and 446,000 MT in MY 2012/2013. Domestic consumption of PKM in Indonesia is both relatively small and limited to feed use. Biological and physical characteristic of PKM that require additional treatment before it is ready for feed use prevents domestic feed producers from using PKM in large quantities. The first treatment is removing palm kernel shell as it can hurt digestive organs of livestock. The second treatment is fermentation using enzyme to increase digestibility and bioavailability of PKM. Fermentation using enzyme is quite expensive thereby increasing feed production cost. Trade: Small domestic PKM consumption results in large capacity of Indonesian palm kernel mills to export PKM. The data shows that export of PKM accounted for 87 percent of total production in MY 2010/2011. Post believes export to production ratio will stay constant in the next two marketing years. Export of PKM, therefore, will increase from 2.95 MMT in MY 2010/2011 to 3.15 MMT in MY 2011/2012 and 3.35 MMT in MY 2012/2013. Stocks: Ending stock of PKM is expected to increase from 292,000 MT in MY 2010/2011 to 297,000 MT in MY 2011/2012 and 302,000 MT in MY 2012/2013 due to small domestic consumption growth. Production, Supply and Demand Data Statistics: Meal, Palm Kernel Indonesia 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Crush 6,105 6,200 6,525 6,450 6,950 Extr. Rate, 999.9999 1 1 1 1 1 Beginning Stocks 192 192 138 292 297 Production 3,245 3,400 3,465 3,550 3,800 MY Imports 0 0 0 1 1 MY Imp. from U.S. 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 Total Supply 3,437 3,592 3,603 3,843 4,098 MY Exports 2,949 2,950 3,060 3,150 3,350 MY Exp. to EU 1,364 1,364 1,350 1,435 1,530 Industrial Dom. Cons. 0 0 0 0 0 Food Use Dom. Cons. 0 0 0 0 0 Feed Waste Dom. Cons. 350 350 413 396 446 Total Dom. Cons. 350 350 413 396 446 Ending Stocks 138 292 130 297 302 Total Distribution 3,437 3,592 3,603 3,843 4,098 1000 MT, PERCENT Commodities: Oilseed, Copra Production: Total un-husked but in shell coconut (coconut) production and other type of coconut use determine coconut supply for copra production. The productivity of coconut trees in Indonesia is relatively low and the trees are sensitive to weather conditions. Smallholders are dominant in coconut production, as they account for 98 percent of total planting area. Most producers treat their coconut trees as a backyard crops and apply minimal levels of fertilizer, conduct regular crop maintenance, and tend to use low quality planting materials. Post Oilseed Update March 2012 explained that above normal rainfall in 2010 decreased coconut production in the previous marketing year. Supportive weather in 2011 is expected to slightly increase coconut production to 3.48 MMT in MY 2011/2012. Should the weather stay normal in the current marketing year, coconut production would reach 3.5 MMT in MY 2012/2013. Higher coconut production will lead to larger coconut supply for copra production. Post predicts that Indonesian copra production will increase from 1.46 MMT in MY 2010/2011 to 1.48 MMT in MY 2011/2012 and 1.6 MMT in MY 2012/2013. Source: Post?s Estimation Copra and direct household consumption account for 80 percent of total coconut production in Indonesia. The use of coconut for copra is common in Kalimantan, Sumatra, and eastern part of Indonesia such as Sulawesi, Maluku, and Papua. Direct use of coconut for human consumption is widespread in Java. Households in Java use coconut to produce fresh coconut milk, traditional cakes/foods, iced coconut deserts, and many other usages. Source: FAS Jakarta Java Island Trip Feb 2012 Remark: coconut market in District Prembun, Kebumen Regency, Central Java. The farmers, which also grow rice, bring their harvested coconut to the market early in the morning. They will meet with coconut traders from other regencies in Central Java and Yogyakarta. The traders then will transport coconuts using small-medium trucks to destination areas. Farmers and traders coconut transaction will dismiss at 8 am. While the percentage is still relatively small, coconut exports increased significantly from 110 million coconuts in MY 2009/2010 to 310 million coconuts in MY 2010/2011. Post predicts that export of coconut will further increase to 400 million coconuts in MY 2011/2012 and 450 million coconuts in MY 2012/2013. Coconut-based food manufacturers that use 16 percent of total coconut supply have proposed to Ministry of Trade since last year for the imposition of coconut export tax at 200 ? 300 rupiah per coconut. The manufacturers become concerned that growing export of coconut will disturb their raw material supply. Consumption: Approximately 92 percent of total annual copra supply is processed into CNO. Indonesian copra mills are expected to process 1.45 MMT and 1.55 MMT of copra in MY 2011/2012 and MY 2012/2013. Trade: Higher copra production should increase copra availability for exports. Indonesia will register higher copra export from 35,000 MT in MY 2010/2011 to 38,000 MT in MY 2011/2012 and 40,000 MT in MY 2012/2013. Stocks: An estimated increase in copra production in MY 2011/2012 cannot fully compensate decreased production in the previous marketing year. As a result, ending stock is predicted to decline by 8,000 MT to 85,000 MT in MY 2011/2012, and it will recover to 95,000 MT in MY 2012/2013. Production, Supply and Demand Data Statistics: Oilseed, Copra Indonesia 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 0 0 0 0 0 Area Harvested 0 0 0 0 0 Trees 0 0 0 0 0 Beginning Stocks 173 173 83 93 85 Production 1,460 1,460 1,480 1,480 1,600 MY Imports 0 0 0 0 0 MY Imp. from U.S. 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 Total Supply 1,633 1,633 1,563 1,573 1,685 MY Exports 35 35 31 38 40 MY Exp. to EU 0 0 0 0 0 Crush 1,511 1,505 1,460 1,450 1,550 Food Use Dom. Cons. 0 0 0 0 0 Feed Waste Dom. Cons. 4 0 4 0 0 Total Dom. Cons. 1,515 1,505 1,464 1,450 1,550 Ending Stocks 83 93 68 85 95 Total Distribution 1,633 1,633 1,563 1,573 1,685 1000 HA, 1000 TREES, 1000 MT Commodities: Oil, Coconut Production: Copra supply that goes to copra mill determines production of CNO in Indonesia. Post, in the copra oilseed section, predicts that Indonesia will process 1.45 MMT and 1.55 MMT of copra in MY 2011/2012 and MY 2012/2013 respectively. The figures suggest that Indonesia will produce 900,000 MT of CNO in MY 2011/2012. Production of CNO is predicted to further increase to 970,000 MT in MY 2012/2013. Consumption: Food use of CNO is smaller compared to that of industrial uses, which is due to the relatively high price. Industrial users process it into higher-value added products that will be sold at higher prices. Post predicts domestic use of CNO to decline from 428,000 MT in MY 2010/2011 to 390,000 MT in MY 2011/2012 due to lower food use. Food use of CNO is expected to further decline to 110,000 MT in MY 2012/2013. Significant increase in industrial use of CNO, however, helps total domestic consumption to recover to 430,000 MT in MY 2012/2013. Trade: Limited production growth, combined with growing industrial demand for CNO, will result in small room for robust CNO export growth. Post predicts an export to grow slowly from 572,000 MT in MY 2010/2011 to 580,000 MT in MY 2011/2012. Increase in CNO production will lead to higher export growth to 595,000 MT in MY 2012/2013. Stocks: Post predicts an ending stock to experience the downtrend from 198,000 MT in MY 2010/2011 to 128,000 MT in MY 2011/2012 and 73,000 MT in MY 2012/2013. The downtrend reflects limited production growth and growing domestic and foreign demand for CNO. Production, Supply and Demand Data Statistics: Oil, Coconut Indonesia 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Crush 1,511 1,505 1,460 1,450 1,550 Extr. Rate, 999.9999 1 1 1 1 1 Beginning Stocks 258 258 226 198 128 Production 968 940 968 900 970 MY Imports 0 0 0 0 0 MY Imp. from U.S. 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 Total Supply 1,226 1,198 1,194 1,098 1,098 MY Exports 572 572 552 580 595 MY Exp. to EU 110 123 125 120 125 Industrial Dom. Cons. 255 255 250 275 320 Food Use Dom. Cons. 173 173 192 115 110 Feed Waste Dom. Cons. 0 0 0 0 0 Total Dom. Cons. 428 428 442 390 430 Ending Stocks 226 198 200 128 73 Total Distribution 1,226 1,198 1,194 1,098 1,098 1000 MT, PERCENT Commodities: Meal, Copra Production: Similar to CNO, copra supply that goes to copra mill determines production of CM in Indonesia. Post, in the copra oilseed section, predicts that Indonesia will process 1.45 MMT and 1.55 MMT of copra in MY 2011/2012 and MY 2012/2013. The figures suggest that Indonesia will produce 475,000 MT of CM in MY 2011/2012. Production of CM is predicted to increase to 495,000 MT in MY 2012/2013. Consumption: According to Asian and Pacific Coconut Community (APCC), Indonesian CM consumption has been increasing at around 3 percent per year in the last five years. The annual growth rate suggests that domestic feed use of CM will increase from 290,000 MT in MY 2011/2012 to 300,000 MT in MY 2012/2013. Trade: Indonesian CM export has been decreasing in the last five years. Post predicts that Indonesian CM export performance will nearly stagnant in the next two marketing years. Export will slightly increase from 185,000 MT in MY 2011/2012 to 195,000 MT in MY 2012/2013. Source: GTIS Tougher competition from PKM, in addition to limited production growth, has become the factor that contributes to stagnant CM export performance. Indonesian strong palm oil production growth produces abundant supply of PKM at cheaper price. Consequently, major importing countries such as Europe, South Korea, and Vietnam are replacing CM with PKM. Source: GTIS Source: GTIS European countries and Vietnam have been significantly replacing CM with PKM in the last 11 years. South Korea, however, prefers to gradually replace CM with PKM during the same timeframe. Stocks: Post predicts a constant ending stock at 5,000 MT in MY 2011/2012 and MY 2012/2013. Production, Supply and Demand Data Statistics: Meal, Copra Indonesia 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Crush 1,511 1,505 1,460 1,450 1,550 Extr. Rate, 999.9999 0 0 0 0 0 Beginning Stocks 3 3 3 5 5 Production 493 480 476 475 495 MY Imports 0 0 0 0 0 MY Imp. from U.S. 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 Total Supply 496 483 479 480 500 MY Exports 188 188 200 185 195 MY Exp. to EU 0 7 0 7 8 Industrial Dom. Cons. 0 0 0 0 0 Food Use Dom. Cons. 0 0 0 0 0 Feed Waste Dom. Cons. 305 290 276 290 300 Total Dom. Cons. 305 290 276 290 300 Ending Stocks 3 5 3 5 5 Total Distribution 496 483 479 480 500 1000 MT, PERCENT Commodities: Meal, Soybean Consumption: Animal feed production mainly determines domestic consumption of SBM in Indonesia. According to Indonesian Feed Miller Association (GPMT), animal feed production will increase from 11.2 MMT in MY 2010/2011 to 12.3 MMT in MY 2011/2012. GPMT assumes a 6 percent annual animal feed production growth. Indonesian animal feed production, therefore, would reach 13.1 MMT in MY 2012/2013. Total animal feed production as mentioned in previous paragraphs does not include yet self-mix production. Self-mix feed is one of the solutions for poultry farmers; layer in particular, to minimize feed cost. According to one of GPMT officials, production of self-mix feed account for approximately 20 percent of total animal feed production. Total animal feed production to include self-mix, therefore, will reach 15.4 MMT in MY 2011/2012 and 16.4 MMT in MY 2012/2013. Manufactured and self-mix feed producers use 20-25 percent and 15-20 percent of SBM in their feed formulation respectively. Post, based on estimated animal feed production figures and SBM share in feed formula, predicts that Indonesian domestic consumption of SBM will reach 3.3 MMT in MY 2011/2012 and 3.5 MMT in MY 2012/2013. Trade: Indonesia solely relies on foreign supply of SBM to satisfy domestic demand as Indonesia has no soybean crushing facilities. Post predicts that Indonesia will import 3.275 and 3.5 MMT of SBM in MY 2011/2012 and MY 2012/2013 respectively. Source: GTIS Argentina and Brazil are the main SBM suppliers to Indonesia as those two countries offer average quality SBM with competitive prices. While India offers the most competitive prices, Indonesia does not procure much SBM from India due to quality concerns. Source: Index Mundi Indonesian animal feed producers recognize high quality of U.S SBM. The price concerns, however, prevent them from procuring a large amount of U.S SBM. As can be seen in the price chart, U.S. SBM prices tend to stay at higher level compared to SBM price from India, Brazil, and Argentina. Stocks: Indonesian animal feed producers maintain one to two weeks SBM inventory in their bulk storage. An estimated domestic consumption figure implies that Indonesian SBM stock level is ranging from 65,000 to 130,000 MT. Post predicts that SBM stock level will be stable at 73,000 MT in MY 2011/2012 and MY 2012/2013. Production, Supply and Demand Data Statistics: Meal, Soybean Indonesia 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Crush 0 0 0 0 0 Extr. Rate, 999.9999 0 0 0 0 0 Beginning Stocks 45 45 75 98 73 Production 0 0 0 0 0 MY Imports 3,069 3,063 3,100 3,275 3,500 MY Imp. from U.S. 175 27 175 30 30 MY Imp. from EU 1 0 0 0 0 Total Supply 3,114 3,108 3,175 3,373 3,573 MY Exports 0 0 0 0 0 MY Exp. to EU 0 0 0 0 0 Industrial Dom. Cons. 0 0 0 0 0 Food Use Dom. Cons. 0 0 0 0 0 Feed Waste Dom. Cons. 3,039 3,010 3,100 3,300 3,500 Total Dom. Cons. 3,039 3,010 3,100 3,300 3,500 Ending Stocks 75 98 75 73 73 Total Distribution 3,114 3,108 3,175 3,373 3,573 1000 MT, PERCENT
Posted: 23 April 2012

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