CPO producers see `good' prices

The Jakarta Post, Jakarta  |  Thu, 01/29/2009 1:54 PM  

Producers of crude palm oil (CPO) expect prices to reach as high as US$600 per ton this year, betting on higher domestic sales which would help avoid oversupply in global markets, thus stabilizing the prices. 

The Indonesian Palm Oil Association (GAPKI) said Tuesday the current prices of around $550 per ton was already far better than in the slump in late last year, which saw CPO prices go as low as $400. 

"Our target is to maintain the CPO average price between US$500 and US$600 per ton this year. Last week, the price averaged US$550 per ton," GAPKI executive chairman Derom Bangun, who is also a member of the Palm Oil Research Center (PPKS) Advisory Board, said. 

"Market conditions might not be as good as they were during the boom in the first half of 2008, but they are better than the conditions when the price slumped dramatically in the second semester of last year," he added. 

Bangun said producers planned to increase domestic sales, in line with a predicted rise in production for 2009. 

"Our production target for 2009 is 20 million tons, of which around 4 to 5.5 million tons are targeted for domestic sales. However, if the government can promote the use of biodiesel more vigorously, domestic sales can be increased up to between 5 and 6.5 million tons," Bangun said. 

"With more domestic consumption, we can reduce the pressure on the international market which in turn will help to stabilize the commodity's average price." 

Last year, Indonesia produced some 18.5 millions tons of CPO, around 14.5 million of which were exported. 

Indonesia exports CPO to over 100 countries, including 15 countries in western Europe such as the Netherlands and Germany. 

CPO producers are now exploring to improve sales penetration in eastern European countries. 

"Slovakia, for example, does not have an oil refinery plant, and we can cooperate with them to supply crude palm oil to their neigboring countries," Bangun said. 

However, sales in western Europe might face a new obstacle as the EU will require CPO to be "certified and sustainable" as of 2010. 

To have the certification, CPO should pass an environment-friendly test to prove whether or not it can reduce the greenhouse gas effect, also known as greenhouse effect, by as much as 35 percent. So far, only one out of about 300 listed producers in Indonesia has passed the test. 

Further details and development on the industry will be discussed in the International Conference and Exhibition on Palm Oil on May 27.-29 in Jakarta. 

The event will feature international speakers and host over 1,000 participants and provide 150 booths for multinational companies. Delegates from Britain, Malaysia, China, India, Nigeria, Vietnam, Thailand, Singapore and Germany have confirmed their participation.(hdt)