Indonesia's crude palm oil (CPO) output slipped 7 percent in November from the previous month, a Reuters survey showed, as the main harvest season ended and monsoon weather arrived in key growing areas. CPO output in November was 2.8 million tonnes, down from 3.01 million tonnes in October, according to the median estimate in a survey of four Indonesian industry officials and plantation companies.
"November production dropped because the main harvest season almost ended," said Fadhil Hasan, executive director at the Indonesian Palm Oil Association (GAPKI). "Exports are lower because of decreasing demand from India and the US, while domestic consumption is increasing because of the biodiesel mandate."
Indonesia's peak palm oil output usually runs over August to September. Production in the world's top producer is typically expected to ease in the following months as the country heads into the beginning of its wet season in November. Indonesia has been pushing for greater local consumption of biodiesel to cut its fossil fuel import bill and create more demand for palm oil. It has increased biodiesel subsidies and will raise the minimum bio content in diesel fuel to 20 percent in 2016 from 15 percent now.
Falling output and rising domestic consumption may support benchmark palm prices, which have climbed more than 5 percent this year and are trading on Thursday at 2,379 ringgit ($550) per tonne. The Reuters survey pegged CPO exports for November at 2.093 million tonnes, the lowest level since August and down 5 percent from October. According to the survey, Indonesian palm stocks were at 2.950 million tonnes in November, down from 3.025 million in October and a level not seen since May.
Indonesia's domestic consumption of the tropical oil was estimated in a range between 550,000 tonnes and 900,000 tonnes. Monthly data published by GAPKI showed November exports at 2.39 million tonnes. The Reuters survey for November comprises contributions from GAPKI, the Indonesian Palm Oil Board, the Indonesian Vegetable Oil Industry Association and Sinar Mas Agro Resources & Technology, one of the largest listed palm oil companies.