TEMPO.CO, Jakarta - The Indonesian Palm Oil Association (GAPKI) reported there is a downtrend in the volume of palm oil stocks. According to GAPKI's record, Indonesia's palm oil stocks, including biodiesel and oleochemical, reached 1.8 million tons in June 2016.
"The downtrend has been draining our early-year stock by 4.36 million tons," GAPKI executive director Fadhil Hasan said on Tuesday, August 9, 2016.
Fadhil said production has stalled because of last year's El Nino. Meanwhile, production in 2016 is still below expectations. These conditions contribute to the depletion of the domestic stock.
"For the next few months stocks are likely to be tight as global market demand and domestic needs may still grow," he explained.
On the other hand, Indonesia's palm oil export, including biodiesel and oleochemical, in June was down one percent from the previous month. Meanwhile, palm oil production, which had been stagnant in the past few months, has now started to crawl up.
At the same time, Indonesia's mandatory biodiesel use has been implemented consistently. Biodiesel absorption for domestic use continues to rise, and will boost the demand for palm oil.
"This will prompt businesses to keep their stocks to meet domestic demand rather than export," Fadhil said.
