Exports of Palm oil Indonesia's crude and refined crude oil shipments rose 62.2% in February from the previous month to a four-month high, the statistics department said on Monday, as Jakarta's decision to cut export taxes attracted buyers from Malaysia.
Higher palm oil exports from Indonesia, the world's biggest producer of the tropical oil, will help reduce stockpiles and support prices that are currently at a premium to rival soybean oil.
Market impact and prices
Indonesia, the world's largest palm oil producer, is managing to reduce its stockpiles with this increase in exports. This is also helping to support palm oil prices, which currently command a premium over soybean oil.
In February, the country exported 2.06 million metric tons of crude and refined palm oil, the highest volume since October. Compared to February 2024, the growth was 45.1%.
Industry data and comparison with Malaysia
The Indonesian statistics department data does not include palm kernel oil, oleochemicals and biodiesel. The country's palm oil association, GAPKI, will later release its own figures covering a wider range of products.
The impact of the tax cut was significant: the price of Indonesian palm oil fell below the level prevailing in Malaysia, resulting in a diversion of buyers to Indonesia. As a result, Malaysian exports fell by 16.27% in February, reaching a four-year low of just 1 million tonnes exported.
Tax reduction and competitiveness
Indonesia has cut its benchmark crude palm oil (CPO) price for February, adjusting the export tax from US$178 per tonne in January to US$124 per tonne in February.
This reduction made the product more accessible on the global market. This further increased its competitiveness in relation to other vegetable oils, including soybean oil and sunflower oil, which come from Argentina, Brazil, Russia and Ukraine.
Outlook for inventories and the global market
Despite the increase in exports, a major increase in Indonesia’s palm oil stocks is not expected. This is due to the implementation of mandatory 40% (B40) biodiesel blending in the country, which will help absorb some of the production.
Furthermore, even though the price of palm oil is higher than that of soybean oil, international demand remains firm, supporting product prices on the global market.
Source: Bernadette Christina, Rajendra Jadhav, John Mair and Rashmi Aich | Notícias Agrícolas
