Indonesian palm oil exports slumped 16% MoM in January, pushing back below the 2mn t threshold for the first time since July 2015. El Nino related fears of reduced Indonesian output capacity have driven prices up more than 7% in dollar terms since the start of this year, crimping demand into large export markets including China and India in January. Malaysian inspection data for the first half of February indicates the downtrend likely has continued in proportion to January.
Chinese palm oil offtake crashed from 632,000t in December to just over 275,000t in January, while Indian offtake plunged from 679,000t to 384,000t. The EU was the second largest source of offtake to India, although there are mounting concerns in southeast Asia over the fallout from France’s new import tax structure aimed at palm which would effectively triple import taxes by the start of next year and effectively price palm out of the French market altogether by 2020. While French imports are relatively small, the tax will is seen further damaging palm’s reputation in Europe.
Despite the marked drop, January exports still remained more than 20% higher than a year ago after a strong build in the rate of shipments through 2015.
MS – 20/02/2015