Indonesia’s end-Jan palm oil stocks dip on lower production, higher exports

Palm oil stock levels in Indonesia fell in January on the back of flat to lower production and firmer exports to 3.099 million mt, data from the Indonesia Palm Oil Association (Gapki) showed Monday.

This was 13% lower compared to December, and 34% less compared to levels in January 2022.

The fall came following a drop in production, with palm oil (consisting of crude palm oil (CPO) and crude palm kernel oil (CPKO)) output in January falling by 11.3% on the month to 4.26 million mt largely due to seasonal factors.

Palm oil production in January last year was 4.23 million mt.

Meanwhile, a higher export volume also contributed to the drop in inventory levels, with Indonesian palm exports (consisting of CPO, processed CPO, CPKO, processed CPKO, biodiesel and oleochemicals) touching 2.95 million mt, 7% higher compared to December and 35% higher against a year ago.

Exports to Egypt, Italy and Singapore showed a strong recovery in January, rising between 53% to over 500% from December, while exports to Bangladesh, Pakistan, Vietnam and Russia fell by more than 50% in December, Gapki said in its statement.

Domestic consumption on the other hand, fell in January by 7.6% on the month, led largely by the fall in consumption from the food sector.   

Food sector consumption came to 793,000 mt, 12% lower against December, while consumption for oleochemicals and biodiesel were largely unchanged at 183,000 mt and 810,000 mt, versus 185,000 mt and 850,000 mt in December.

For February, Indonesian palm oil exports are expected to lower on the back of tightened export restrictions, with cargo surveyor estimates pegging the level at about 1.997 million mt.

Earlier this year, the Indonesian government placed further restrictions on its palm oil exports by suspending two-thirds of existing unutilised export permits (which exporters receive upon fulfilling a ‘domestic market obligation’ (DMO) of selling a portion of their products locally) and raised the DMO target from 300,000 mt to 450,000 mt per month from February to April in a bid to raise local cooking oil supply and cool prices.

For February, 80.03% of the DMO target was achieved with 360,150 mt of cooking oil distributed.

As of March 26, only 221,659 mt of the 450,000 mt cooking oil target has been distributed for March so far, a trade ministry official said today.