Indonesia's crude palm oil (CPO) output likely rose 12.6 percent in June from May, marking a second month of growth as weather conditions improved although inventories still declined due to a stretch of dry weather, according to a Reuters survey.
CPO production likely rose to 2.464 million tonnes in June from 2.188 million tonnes in May, according to the median estimate in a survey of two industry associations, a state palm research firm and a top planter. The survey respondents said output rose for a second straight month after eight monthly declines through April on the lingering impact of drought from an El Nino weather pattern.
Indonesia's weather agency has said it expects high rain volumes July through September, which is typically a dry season. Due to the production declines stretching back to late last year, CPO inventories likely declined 18 percent last month to 1.712 million tonnes, the lowest since the survey started in August 2014.
"Because of local supply scarcity, despite a declining trend in global palm prices, the prices for fresh fruit bunches from farmers are at a high level," said Sahat Sinaga, executive director of the Indonesian Vegetable Oil Industry Association (GIMNI). Exports of Indonesian CPO for June were seen at 1.798 million tonnes, compared with 1.919 million tonnes a month earlier, according to the survey. Data from the Indonesian Palm Oil Association (GAPKI) showed the country exported 1.76 million tonnes of palm oil and palm kernel oil in May, down 16 percent from the previous month. GAPKI's data for June exports is not yet available.