Oilseeds and Products Update

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

Posted on: 19 Dec 2012

Indonesia produced 25.9 million metric tons (MMT) of crude palm oil (CPO) in marketing year (MY) 2011/2012.

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: 11/21/2012 GAIN Report Number: ID1239 Indonesia Oilseeds and Products Update 2012 Approved By: Ali Abdi Prepared By: Jonn Slette/Ibnu Edy Wiyono Report Highlights: Indonesia produced 25.9 million metric tons (MMT) of crude palm oil (CPO) in marketing year (MY) 2011/2012. Post predicts a further increase in CPO production to 28 MMT in MY 2012/2013. Indonesian palm oil exports increased by 1.7 MMT to 18.2 MMT in MY 2011/2012. Post expects that Indonesian palm oil exports will continue to grow to 19.6 MMT in MY 2012/2013. Palm oil stocks increased significantly from 1.27 MMT in MY 2010/2011 to 2.091 MMT in MY 2011/2012. Stocks will further increase to 2.784 MMT in MY 2012/2013 due to production levels well beyond what can be absorbed by domestic demand. Preliminary trade data suggests that Indonesia will likely import 3.1 MMT of soybean meal (SBM) in MY 2011/2012. SBM imports are expected to slightly increase to 3.15 MMT in MY 2012/2013. Post: After Export Tax Gross Profit Index 50% 40% 30% 20% Jakarta Production Post initially predicted that Indonesian CPO production would reach 25.4 MMT in MY 2011/2012. However, significant increases in 0ending s%tocks and strong exports suggest that production can reach 25.9 MMT in MY 2011/2012. Post also revises earlier estimates for CPO production from 27.0 MMT to 28.0 MMT in MY 2012/2013. Consumption Lower CPO prices should trigger increased biodiesel production in Indonesia as the biodiesel producers enjoy cheaper feedstock prices. Limited domestic consumption and more challenging overseas markets for palm-oil based biodiesel, however, may not automatically equate to lower CPO prices and higher biodiesel production. Trade Preliminary export data from Central Statistical Agency (BPS) show that Indonesia exported 18.2 MMT of palm oil products in MY 2011/2012. Post predicts a further increase in Indonesian palm oil export to 19.6 MMT in MY 2012/2013. 0% Indonesia’s palm oil producers enjoy larger gross profits compared to their Malaysian counterparts due to lower labor costs and a more favorable export tax scheme, which was implemented in October 2012. Indonesian palm oil products are currently more competitive as they can offer more attractive prices to r May Jun Jul Aug Sep the buyers. Oct Nov Dec Jan Feb Mar Ap 2011 2012 Indonesia Malaysia Global Palm Oil Export Share by Country of Origin 65% 55% 45% 35% 25% 15% 5% Indonesia Malaysia Other A month by month comparison indicates that Indonesia and Malaysia took turns leading in palm oil exports throughout MY 2010/2011. However, Indonesia’s new export tax scheme gives Indonesia a relative advantage over Malaysia in MY 2011/2012. As a means to maintain its competitiveness, the Government of Malaysia will reduce its palm oil export tax from 23 percent to 8-10 percent, effective as of January 2013. Malaysia’s new export tax regime is expected to create a more competition between Indonesia and Malaysia in MY 2012/2013. Ending Stocks Media reports and Post contacts indicate that Indonesian palm oil ending stocks at the end of MY 2011/2012 exceeded 3.0 MMT. While Post acknowledges an increase in Indonesian palm oil ending stocks, Post estimates ending stocks at 2.091 MMT in MY 2011/2012. Strong export growth (almost 11 percent) and higher domestic consumption are the main drivers for Post’s conservative palm oil ending stocks estimates. Production, Supply, and Demand (PSD) data show that Indonesia’s palm oil supply increased by 3.31 MMT in MY 2011/2012, with roughly 25 percent going to higher ending stocks. Oc t -10 Nov- 10 De c - 10 J a n - 11 Fe b - 11 Ma r - 11 Apr - 11 Ma y -11 J un -11 J ul -11 Aug-11 Se p -11 Oc t -11 Nov-11 De c - 11 J a n - 12 Fe b- 12 Ma r -12 Apr- 12 Ma y - 12 J un -12 J ul - 12 Aug - 12 Se p- 12 Palm oil - Monthly Price (US$/MT) Month Price Change Apr-12 1,157.45 - May-12 1,031.12 -10.91% Post predicts that Indonesian palm oil ending stock will further increase to 2.784 MMT in MY Jun-12 927.63 -10.04 2012/2013. CPO Price Pa 4 2.69%lm oil prices have declined sharply over the past six months, with Ma Jul-12 952.5laysian palm oil prices reflecting a 24 percent during the April - September 2012 period. Aug-12 930.61 -2.30 Sep-12 879.53 -5.49% Malaysia Palm Oil Futures (first contract forward) 4-5 percent FFA Post observes two major factors that contribute to the recent downtrend of palm oil prices: Malaysia’s higher ending stock due to mild export growth and, Indonesia’s larger ending stock due to strong production growth. Oil, Palm 2010/2011 2011/2012 2012/2013 Indonesia 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 0 (1000 HA) Area Harvested 0 6,650 0 7,135 0 7,584 (1000 HA) Trees 0 997,500 0 1,070,250 0 1,137,600 (1000 TREES) Beginning Stocks 39 242 895 1,272 1,801 2,091 (1000 MT) Production 23,600 23,600 25,900 25,900 28,000 28,000 (1000 MT) MY Imports 23 23 35 35 20 20 (1000 MT) MY Imp. from U.S. 0 0 0 0 0 0 (1000 MT) MY Imp. from EU 0 0 0 0 0 0 (1000 MT) Total Supply 23,662 23,865 26,830 27,207 29,821 30,111 (1000 MT) MY Exports 16,422 16,423 17,900 18,200 19,600 19,600 (1000 MT) MY Exp. to EU 4,100 2,133 4,500 2,820 4,500 2,900 (1000 MT) Industrial Dom. Cons. 1,700 1,600 2,211 2,100 2,493 2,400 (1000 MT) Food Use Dom. Cons. 4,475 4,400 4,702 4,600 5,150 5,100 (1000 MT) Feed Waste Dom. Cons. 170 170 216 216 227 227 (1000 MT) Total Dom. Cons. 6,345 6,170 7,129 6,916 7,870 7,727 (1000 MT) Ending Stocks 895 1,272 1,801 2,091 2,351 2,784 (1000 MT) Total Distribution 23,662 23,865 26,830 27,207 29,821 30,111 (1000 MT) CY Imports 23 25 35 35 35 40 (1000 MT) CY Imp. from U.S. 0 0 0 0 0 0 (1000 MT) Production, Supply, and Demand Table CY Exports 16,436 16,436 17,975 17,850 18,500 18,850 (1000 MT) Indonesian Animal Feed Production Composition CY Exp. to U.S. 0 48 0 50 0 55 (1000 MT) Aqua Feed, 9% Aqua Feed, 9% TS=TD 0 0 0 Self-mix, 3% Self-mix, 2% Comments AGR Number Comments To Post Meal, Soybean Consumption Animal f Poultry, 89% Poultry, 89%eed production mainly determines domestic consumption of soybean meal (SBM) in Indonesia. Indonesia produced 13.573 MMT of animal feed in MY 2011/2012; with poultry feed accounting for almost 90 percent of total feed production. Post predicts that Indonesian animal feed production will increase to 14.5 MMT in MY 2012/2013. 2011/2012 2012/2013 Meal, Soybean 2010/2011 2011/2012 2012/2013 Indonesia 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 0 (1000 MT) Extr. Rate, 999.9999 0. 0. 0. 0. 0. 0. (PERCENT) Beginning Stocks 45 45 380 374 540 544 (1000 MT) Production 0 0 0 0 0 0 (1000 MT) MY Imports 3,069 3,063 3,070 3,100 3,100 3,150 (1000 MT) MY Imp. from U.S. 175 27 175 66 175 30 (1000 MT) MY Imp. from EU 1 0 0 0 0 0 (1000 MT) Total Supply 3,114 3,108 3,450 3,474 3,640 3,694 (1000 MT) MY Exports 0 0 0 0 0 0 (1000 MT) MY Exp. to EU 0 0 0 0 0 0 (1000 MT) Industrial Dom. Cons. 0 0 0 0 0 0 (1000 MT) According to Indonesian Feed Miller Association (GPMT), the SBM content of poultry feed ranges F od Use Dom. C ns. 0 0 0 0 0 0 (1000 MT) from 20 to 25 percent. The table below figures out the SBM content for several type of feed produced in Indonesia Feed Waste Dom. Cons. 2,734 2,734 2,910 2,930 2,950 3,050 (1000 MT) Percentage of SBM in Feed Formula To Poultry Self-mix Shrimp & Fishtal Dom. Cons. 2,734 2,734 2,910 2,930 2,950 3,050 (1000 MT) 20-25% 15-20% 15-35% AnEimal feed production data and percentage of SBM in feed formula suggest that Indonesian animal n i g Stocks 380 374 540 544 690 644 (1000 MT) feed industry consumed 2.93 MMT in MY 2011/2012 and 3.05 MMT in MY 2012/2013. TrTade otal Distribution 3,114 3,108 3,450 3,474 3,640 3,694 (1000 MT) Preliminary trade data from BPS suggests that Indonesia imported 3.1 MMT of SBM in MY 2011/2012. SBM imports are expected to slightly increase to 3.15 MMT in MY 2012/2013. While U.S. soyCbean mYeal acc ouIntsm for onlyp two percenrt otf Insdone sia ’s SB M im po rts, it inc rea se d s ign ifi can tly fr om 2,930 2,939 3,130 3,150 3,230 3,375 (1000 MT) 27 MMT in MY 2010/2011 to 66 MMT in MY 2011/2012. EnCding StYocks Imp. from U.S. 175 22 175 60 175 25 (1000 MT) Indonesian animal feed producers generally maintain up to two weeks of SBM inventory in their bulk storage. SBM traders can have larger inventory equal to two and half month’s domestic consumption. EnCding stoYcks of SBEM stanxds atp 544,0o00 MrT itn MsY 20 11 /2 012 , a nd ar e e xp ect ed to inc rea se to 64 4,0 00 0 0 0 0 0 0 (1000 MT) MT in MY 2012/2013. CY Exp. to U.S. 0 0 0 0 0 0 (1000 MT) SME 2,734 2,734 2,910 2,930 2,950 3,050 (1000 MT) TS=TD 0 0 0 Comments AGR Number Comments To Post
Posted: 19 December 2012

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