Palm oil output and exports from Indonesia, the biggest producer, may increase to a record next year as the global economic recovery stokes demand for the most- consumed vegetable oil, according to industry officials.
Shipments may expand 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 in 2010 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 signs the global economy is recovering from the worst recession since World War II. The rise has been aided by gains in crude oil. Palm oil is used in foods and fuels.
“Demand from China, India and even Pakistan should help to minimize and even outweigh the export impact of any lingering economic weakness from the developed economies,” Scott Briggs, agricultural commodities strategist at Australia and New Zealand Banking Group Ltd. in Melbourne, said by e-mail.
The Organization for Economic Cooperation and Development yesterday doubled its growth forecast for the leading developed economies next year to 1.9 percent as China powers a global recovery. China and India are the top vegetable oil consumers.
“Economic recovery in the U.S. and Europe, and strong growth in China and India” will support demand, Hasan said yesterday. The Indonesian grouping, founded in 1981, has 378 members that control about half of the nation’s planted area.
Price Gains
Palm oil for February delivery gained as much as 1 percent to 2,394 ringgit ($706) a ton today on the Malaysia Derivatives Exchange and was at 2,390 ringgit at 4:16 p.m. local time. The most-active contract rose to a three-month high on Nov. 18.
The price must stay at about current levels as further gains 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. Palm oil competes with soybean oil.
Hasan’s palm oil 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.
Exports Advance
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.
To contact the reporters on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net; Claire Leow in Singapore at cleow@bloomberg.net;
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