Mandatory Use of B20 Leads to a Rise in CPO Production

JAKARTA—Indonesia’s crude palm oil (CPO) production rose 14% in January-August 2019 on the back of implementation of mandatory use of B20. The Indonesian Palm Oil Association (Gapki) said, Thursday (17/10/2019).

Gapki recorded, palm oil production in January-August 2019 reached 34.7 million tons, increased 4 million tons from 30.66 million tons in the same period last year. Production in July-August hit the record high in 2019, reached 4.7 million tons, rose 8.7% from 4.317 million tons in the same month last year.

Gapki’s Executive Director Mukti Sardjono stated that domestic consumption until August 2019 reached 11.73 million tons, rose 41.6% from 8.28 million tons in the same period last year on the back of implementation of mandatory use of B20.

“Mandatory use of B20 has absorbed more than 4 million tons CPO this year. It may increase to 6.4 million tons for biodiesel use by the end of this year,” Mukti said.

Domestic consumption of CPO is projected to be higher next year on back of mandatory use of B30 that will be started by January 2020. Mukti estimated, B30 program would further raise the domestic demand for CPO by some 3 million tons so that the total domestic demand could rise to 9.4 million tons.

“Implementing the B30 program would further raise the domestic demand and reduce export demand slightly. We expect that B30 will raise CPO price.”

Gapki also recorded that CPO price on August 2019 reached US$541 per ton, including cost, freight and insurance (CIF Rotterdam). It was the highest average price since February 2019. Price rise is expected due to mandatory B30 program.

Mukti estimated dry weather in Sumatera and Kalimantan would impact palm oil production in one or two year to come. *** (Source: Bisnis.com)

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