El Nino and Forest fires Influence Indonesian Palm Exports Decline

Forest fires and drought caused by the El Nino weather pattern influence Indonesia's crude palm oil output (CPO) in April probably declined to the lowest in 14 months, according to a Reuters survey.

April CPO production probably fell to 2.132 million tonnes, down from 2.15 million tonnes in March, according to the median estimate in a survey of three industry associations, a state palm research firm and one of the country's largest planters. That would be the eighth month of consecutive declines and the lowest monthly output since the survey results of February 2015.

"Production remains low because of the drought caused by El Nino and the haze disruption. Recovery could be seen in July since this drought and haze could impact production for six months after it," said Hasril Hasan Siregar, a director at the state-owned Indonesian Oil Palm Research Institute.

Indonesia, the world's top palm oil producer, is likely to see output fall by about 2 million tonnes in 2016, while production in Malaysia, the No. 2 supplier, will decline by 1.2 million tonnes, Singapore-based trader Olam International said on Friday.

Exports of CPO in April probably rose to 1.928 million tonnes, from 1.895 million tonnes a month earlier, as demand picks up ahead of the start of the Islamic holy month of Ramadan in June, while domestic consumption should be in a range of 500,000 tonnes to 870,000 tonnes.

The country's CPO inventory likely declined 13 percent to 2.250 million tonnes. Indonesia exported 1.74 million tonnes of palm oil and palm kernel oil in March, a 24 percent drop from the previous month, according to the Indonesian Palm Oil Association, or GAPKI. The group's data for April has not been released yet.

The Reuters survey comprises contributions from GAPKI, the Indonesian Vegetable Oil Industry Association, the Indonesia Palm Oil Board, the Indonesian Oil Palm Research Institute, and PT Sinar Mas Agro Resources & Technology Tbk, one of the largest listed palm oil companies in the country.