New Delhi — Indonesia's palm oil exports are set to rise by 1.5 million mt year on year to 29.5 million mt in 2021-22 marketing year (October-September) as higher production and lower prices are expected to encourage demand in China and the EU, the US Department of Agriculture's Foreign Agricultural Service said.
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The country is expected to produce 44.5 million mt of palm oil in 2021-22, up from 43.5 million mt in 2020-21, USDA said in its monthly oilseeds report released on May 12.
Analysts said that Indonesia was seeing a recovery in output as wet weather conditions that delayed harvesting and milling activities until January have subsided.
Indonesian palm oil production in April reached 3.5 million mt in April, up 10.8% from March, Marcello Cultrera, institutional sales manager at Phillip Futures said.
Indonesia is the world's largest palm oil producer and exporter and accounts for about 54% of the global supply.
World production at multiyear high
USDA expects annual global palm oil production to grow 3.7% to 76.38 million mt in 2021-22, mainly on account of Indonesia's growth as well as a small increase from second-largest producer Malaysia.
The agency expects Malaysia's production to rise marginally to 19.70 million mt from 19 million mt during the same period as labor issues due to pandemic-led border closures are expected to end.
Palm oil is the most grown and used vegetable oil consumed globally for food and industrial use.
Inventories to fall further
Global ending stocks of palm oil are set to fall in 2021-22 despite record production as stocks will be depleted from consumption, USDA said.
Indonesia's ending stocks are expected to fall to 4.79 million mt in 2021-22 from 5.07 million mt in 2020-21.
Meanwhile, Malaysia's ending stocks are expected to fall to 1.39 million mt from 1.46 million mt.
Exports to the world's largest buyer, India, are set to fall marginally, while China and the EU will raise their buying of palm oil in 2021-22, USDA said.
Palm oil prices continued their nearly 12-month climb through April, with the strength linked to tight inventories and lower production.