Palm Oil Exports, Output From Indonesia to Increase, Group Says

Nov. 20 (Bloomberg) -- Palm oil output and exports from Indonesia, the biggest producer, may increase next year as the global economic recovery stokes demand for the world’s most consumed vegetable oil, according to industry officials.

Shipments may grow between 7 percent and 10 percent from an estimated 15.8 million metric tons this year, Fadhil Hasan, executive director at the Indonesian Palm Oil Association, said in an interview. Output may climb to at least 21.5 million tons from this year’s 20.5 million, Hasan said.

Increased shipments may help cool prices that have risen 40 percent this year on concern there may be a shortage of oilseeds, which can be crushed to produce a rival to palm oil. The advance has been aided by gains in crude, and signs the global economy is recovering from the worst recession since World War II.

“Economic recovery in the U.S. and Europe, and strong growth in China and India” will support demand, Hasan said yesterday in Jakarta.

Palm oil for February delivery slid 1.2 percent to 2,371 ringgit ($700) a ton yesterday on the Malaysia Derivatives Exchange as some investors sold the commodity to lock in gains after the contract climbed to a three-month high on Nov. 18.

The price must stay at about current levels as any further increase will make palm oil less attractive than other edible oils, said Steaven Halim, second secretary at the association. “I don’t think it’s good if it goes higher, because usually if it gets too high, users will rationalize consumption,” he said.

Mistry’s Forecast

Hasan’s output forecast is less than the prediction from Dorab Mistry, director of Godrej International Ltd., one of India’s biggest buyers of vegetable oils.

Mistry said in September that Indonesia may produce 21.5 million tons this year, and 23.5 million in 2010. Output in Malaysia, the second-largest producer, may total 17.5 million tons this year and expand by 500,000 tons next year, he said. Mistry has been trading edible oils for more than three decades.

Indonesia shipped 11.4 million tons in the first nine months of the year, 16 percent more than a year ago, the association said Oct. 19. Inventories probably climbed to 1.7 million tons in October, compared with the August and September average of 1.3 million to 1.4 million tons, the nation’s palm oil board said Nov. 2.

Stockpile levels of 1.5 million to 1.7 million tons a month are normal, Halim said

India imported 8.66 million tons of vegetable oils in the year ended Oct. 30, 2009, the highest level in 15 years, the Solvent Extractors’ Association said Nov. 16. Palm oil makes up 80 percent of the total.

Palm oil purchases by China climbed 9 percent to 3.9 million tons between January and September, according to customs data. India and China are the biggest consumers of edible oils.