TEMPO.CO, Jakarta - Indonesia's CPO stock continues to decline despite increasing production. This is because of an increasing demand from the global market, especially from China, the European Union, and the United States continues to rise.
The Indonesian Palm Oil Association (Gapki) noted that palm oil production in August reached 2.98 million tons, up 7.0 percent from July's 2.78 million tons.
"Production began to increase due to favorable weather," Gapki's executive director Fadhil Hasan said on Thursday, October 6, 2016.
August also saw an increased export demand for CPO and its derivative products—including biodiesel and oleochemicals—to 2.23 million tons, or up by 29 percent from July's volume.
"Palm oil exports rose as the market anticipates global price increase due to the rapid depletion of palm oil stocks in Indonesia and Malaysia," Fadhil said.
China's demand rose by 69 percent to 267,980 tons, while EU countries' demand increased 43 percent to 486,050 tons. The most significant increase in demand came from the United States with a jump of 183 percent from July's 47,730 tons to 135,150 tons in August.
"Declining stock of palm oil in Indonesia and Malaysia has led to price increases because traders began to buy in bulks as to anticipate higher price hikes," he said.
As a result, the global price of CPO cranked up throughout September, moving between US$740 and US$795 per metric ton. Gapki predicts the global CPO price to stay within the range of US$750-US$790 per metric ton throughout October 2016.
PINGIT ARIA