Foreign Exchange Of Export Palm Oil Remains Shining Reaches USD 22.9 Billion During Covid-19 Pandemic
Even in the midst of the Covid-19 pandemic and the sluggish global economy, the palm oil industry has succeeded in proving its existence in the national economy. One of the proofs can be seen from the amount of foreign exchange generated by the export of palm oil-based products.
Data from the Central Bureuau of Statistics (BPS) shows the export volume of palm oil-based products (including CPO and RPO, Crude and Refined PKO, biodiesel, and oleochemicals) for the period of January to December 2020 was 33.9 million tons, or lower than the previous year which reached 37.3 million tons. However, the export value of palm oil products in 2020 reach USD 22.9 billion or IDR 321.5 trillion (with an exchange rate of IDR 14,000). The foreign exchange for palm oil product exports this year is even higher than in 2019, which was only USD 20.2 billion.
The sparkling export performance of palm oil products in 2020 has succeeded in bringing them as the main contributor to Indonesia’s export foreign exchange. Even their foreign exchange was greater than foreign exchange from export oil and gas products, as well as mining products.
The large foreign exchange value for palm oil product exports was due to an increase in prices especially for CPO and RPO products, meanwhile the export volume of these products has actually decreased due to low global demand. This is confirmed by data from Malaysia Palm Oil Board (MPOB) shows an increase in the average monthly CPO price (CIFF Rotterdam) from USD 592 per ton in June 2020 to USD 954 per ton in December 2020. The average price (CIFF Rotterdam) for RPO products (RBD Palm Oil, RBD Palm Olein, and RBD Palm Stearin) also increased by around USD 637 per ton to USD 975 per ton in the same period.
However, this is different from the export perfomance of palm oil-based oleochemical products which also has increased driven by the increase in export volume. During the 2019-2020 period, it’s export volume was increased from 3.1 million tons to 3.8 million tons, while the export value also increased from USD 2 billion to USD 2.6 billion. The high demand of the global consumer for hygienic products such as soap, detergent, hand sanitizer and disinfectant, which their functions to prevent the transmission of the Covid virus also encourages the demand for palm oil-based oleochemicals as one of the raw materials for these hygiene products.
Otherwise, the export performance of biodiesel products has decrease both in terms of export volume and value. This is due to the lockdown policy that is implemented by importer countries to limit economic and social activities as effort to minimize contact and transmission of Covid-19, so that it has an impact on reducing biodiesel demand.
Among the top-five main export destination countries for Indonesian palm oil products, the decline in export volume occurred in China (24.3 percent), European Union (18.5 percent) and United States (1.3 percent). In contrast to these countries above, exports of Indonesian palm oil products to India and Pakistan have increased respectively by 2.1 percent and 12.3 percent in the same periode.
The impact of Covid-19 in China on the decline in demand and consumption of palm products was very large, especially in the first semester of 2020. Apart from the impact of Covid-19, the decline in demand was also related to the soybean harvest in Brazil which was able to reduce pressure on China’s soybean supply due to the trade war with the United States. However, the demand for palm oil products in China gradually recovered in the second semester as economic and social activities in this country returned to normal.
It is expected that exports of palm oil products in 2021 will lead to a positive trend both in terms of volume and value. GAPKI Vice Chairman III, Togar Sitanggang predicts that the performance of Indonesian palm oil exports will increase by 11.5 percent in line with the global economic conditions that are starting to recover gradually.
The increase in exports of Indonesian palm oil products identified by increasing global demand for vegetable oil including palm oil, which is the demand also greatly depends on the effectiveness of Covid-19 vaccine. This is because the effectiveness of the vaccine program has been carried out in several countries is a positive sentiment in increasing economic activity and contributing to the consumption of vegetable oils (including palm oil). However, we must be aware of the uncertainty and distraction that has an impact on palm oil demand, such as the re-outbreak of Covid-19 in China and other palm oil importer countries.
Share this article
You may also like these articles