Indonesian palm oil exporters shrugged off the country’s new biodiesel support levy to report a surge in exports in October, with shipments to overseas buyers gaining 11.5% MoM for combined deliveries of palm and kernel oils.
Africa saw by far the largest upswing in palm oil demand, with purchases jumping to 259,000t from just 59,000t the month before. Of Indonesia’s more established customers, China regained its appetite for Indonesian palm, taking 379,000t, a MoM gain of 100,000t.
Indian shipments gained from September’s already year high of 611,000t, hitting 679,000t in October ahead of mid-November’s looming five day Diwali festivities.
Traders are closely eyeing the Indonesian market for any signs of a dent in production related to the El Nino effect on rainfall as well as lower growth stimulus for fresh fruit bunches given Indonesia’s lingering smog problems.
The country this week allocated biodiesel supply quotas to ten suppliers for the six month period from November to April. The total allocations imply a surge in annual domestic biodiesel consumption to 3.2mn t after earlier efforts to enforce a B10 mandate have struggled against palm oil’s return to price premiums relative to gasoil.
The new biodiesel mandate is equivalent to just over 10% of Indonesia’s government forecast for 2016 palm production of 30.8mn t, marked essentially flat YoY. But the government expects palm producers to increase output rapidly from 2017 when palm production is projected at 32.7mn t, rising to 34.5mn t in 2018 and 36.4mn t in 2019.
MS – 10/11/2015