Indonesia's palm oil exports to stay flat

KUALA LUMPUR: Indonesia's palm oil exports are likely to stay flat like last year's 17.6 million tonnes due to lacklustre economic growth in Europe and the US curb on demand for cooking oil, said Gabungan Pengusaha Kelapa Sawit Indonesia (GAPKI) executive director Dr Fadhil Hasan.

On the bright side, Fadhil said China remains Indonesia's third biggest palm oil buyer. "Shipments in the first half of the year accounted for only 45 per cent of Indonesia's exports. But demand will usually pick up in the second half because there are more festivities and religious events that spur more preparation of fat-laden foods like cookies, chocolate, ice cream and cakes," he said.

Fadhil was speaking on the sidelines of the Oils and Fats International Congress (OFIC) 2012 held here recently. 

Organised by the Malaysian Oil Scientists' and Technologists' Association (Mosta) and the Malaysian Palm Oil Board (MPOB), the congress carried the theme "Future of Oils and Fats - Is Smart Partnership the Way Forward?"

Yesterday, the third-month benchmark palm oil prices on the Malaysian Derivatives Exchange traded RM18 lower to close at RM2,912 per tonne.

LMC International chairman Dr James Fry, in presenting his forecast on vegetable oils at the conference, reiterated his long-held view that palm oil prices will continue to be highly influenced by petroleum prices. 

"In the first quarter of 2013, palm oil prices could fall further to RM2,450 per tonne if Brent crude dropped to US$80 a barrel," he said.

"Higher output from the Organisation of Petroleum Exporting Countries, which accounts for one-third of the world's oil production, and the worsening of the eurozone debt crisis, could continue to be a drag on Brent crude prices," he said.

On Malaysia's palm oil output, Fry sees a 3 per cent dip to 18.3 million tonnes this year because of "the legacy of dry conditions in the previous year".

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