Indonesia sees palm oil output up by 2.6% in 2022

[JAKARTA] Indonesia’s crude palm oil output is expected to rise 2.6 per cent next year to 51.01 million tonnes from a 2021 estimate of 49.71 million tonnes, head of the Estate Crop Fund Eddy Abdurrachman said on Tuesday (Dec 28).

Demand in 2022 for exports was seen rising to 27.9 million tonnes, versus 27.08 million tonnes expected in 2021, he said, with domestic demand seen increasing to 11.4 million tonnes next year, from an estimated 11.1 million in 2021.

“We expect that in 2022, palm production will start to recover,” said Eddy, who added that production had been disrupted by weather patterns like El Nino and La Nina in 2020 and 2021, contributing to rising prices this year.

Indonesia is the world’s biggest producer and exporter of palm oil.

The Estate Crop Fund, a government agency in charge of collecting export levies, provided 3 price forecasts for the edible oil, from US$747 per tonne up to US$1,094 per tonne.

Eddy said the baseline forecast used by the fund is the moderate price range of US$821 to US$1,032 per tonne.

Higher demand in economies recovering from the Covid-19 pandemic and higher cost of competitor oils have also affected prices, but “our projection for 2022 is that prices will normalise”, he said.

The jump in prices this year has disrupted the fund’s replanting programmes, aimed at replacing smallholders’ old palm trees with new ones using better quality seeds, Eddy added.

Farmers had delayed applications to join the programme in order to sell fruit bunches at higher prices, resulting in a drop in total new plantation area to 42,200 hectares, down from over 94,000 hectares in 2020.

Indonesia’s domestic use of crude palm oil for biodiesel is expected to reach 10.15 million kilolitres in 2022, up from 9.4 million kilolitres estimated for this year, according to the fund.