Dry Weather Drags Indonesia Palm Reserves Near 8-Month Low
(Bloomberg) -- Palm oil stockpiles in Indonesia probably dropped to the lowest in eight months in December after dry weather curbed production in the world’s largest grower.
Inventories likely declined almost 13% from November to 3.49 million tons, according to the median of estimates from eight analysts and plantation executives compiled by Bloomberg. Although December stockpiles may have fallen to the lowest since April, they would be well above reserves of 3.26 million tons a year earlier, according to data from the Indonesian Palm Oil Association, or Gapki.
Production contracted about 5% to 3.9 million tons, according to the survey. Exports probably fell 1% to 2.89 million tons, while domestic consumption was seen steady at 1.45 million tons in December, the survey showed. Gapki may release its reserves, production and export data for November and December later this month.
Lower inventories may further support palm oil futures that jumped 44% last year -- the biggest annual gain in a decade -- on concerns that dry weather conditions in Indonesia and Malaysia will curb supplies and higher biofuel use will lead to a surge in demand.
“The main story for me is that production in November and December will be drastically lower due to extreme dry weather, particularly in Central Kalimantan and Southern Sumatra, which are key oil palm areas,” said Sathia Varqa, owner of Palm Oil Analytics in Singapore.
Indonesia’s continued push to increase biodiesel usage may keep a lid on stockpiles. The government’s move may potentially boost palm oil consumption by 3 million tons this year, according to a Jan. 14 report by Bloomberg Intelligence.
|Dec. 2019 (Survey)||Nov. 2019 (Survey)||Dec. 2018 (Gapki)|
NOTE: Figures in million tons
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