23.07.2020 (www.bloomberg.com) –
- July production seen dropping to lowest in more than two years
- Exports are seen advancing, offering support to market rally
Palm oil stockpiles in Indonesia, the world’s top grower, will probably slump to their smallest in 16 months by the end of July as production hits the lowest in more than two years after floods in major growing regions disrupted the harvest and delivery of fruit to mills.
Reserves are forecast to fall more than 10% from a month earlier to 3 million tons, according to the median estimate from five analysts and plantation executives compiled by Bloomberg. Production will drop 8.3% to 3.54 million tons from an estimated 3.86 million tons in June, the survey showed.
Floods at some plantations in Kalimantan and Sumatra have disrupted the palm fruit harvest, said Eddy Martono, director of planter PT Mega Karya Nusa. July is also usually a low production month and output is expected to start rising in September, he said.
Lower supply from Indonesia may further support benchmark prices that have risen about 15% this month. Fitch Solutions raised its average price forecast for this year to 2,450 ringgit per ton, from 2,300 ringgit previously. Import demand from India and China in the coming months is expected to remain robust as the top buyers need to rebuild stocks, it said in a July 20 note.
Domestic consumption for July is seen rising slightly from a month earlier to 1.42 million tons as the mandatory 30% blending of biofuel with gasoil continues. Exports are seen increasing 4.8% to 2.42 million tons.
· NOTE: Figures in million tons
· — With assistance by Atul Prakash