Palm Oil Exports to Fall in 2013/2014

For the first time in almost two decades, palm oil exports are expected to decrease. Read more below about why the demand is falling and what this means for the future of palm oil production in Indonesia and Malaysia. 

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captionPalm oil exports may drop for the first time in 16 years due to price trends in the oilseed market, reports Oil World. 

The German forecasting service estimates that global palm oil exports will amount to 43.75 million metric tons during the season that runs from Oct 1, 2013 to Sep 30, 2014, a 1.1 percent decline from a year earlier. Exports from Indonesia, the world’s top producer, are expected to fall 0.8 percent to 21 million tons, while Malaysia’s exports will drop 2.2 percent to 18.1 million tons. 

“Palm oil has lost attractiveness in the energy markets of Europe and other countries, which resulted in a considerable slowing-down of purchases,” Oil World said, as reported by Bloomberg. “Also, in the food markets palm oil has lost market share to sunflower oil and partly to soya oil. This demand shift was also triggered by the deteriorated price attractiveness of palm oil.” 

Oil World predicts that global palm oil production will still rise nearly 5 percent to a new record during the 2013-2014 season, reaching 58.5 million tons due to increased acreage. 

Global palm oil production and exportsGlobal palm oil production and exports 

Palm oil prices are about 35 percent off their most recent peak reached in February 2011. The falling price has cut into the profitability of palm oil, which nonetheless remains the most lucrative form of land use across large parts of the tropics.

First image: Encyclopedia of Earth