Rising CPO stockpiles are partly responsible for the difficulty for international palm oil prices to strengthen significantly in the second half of 2013. Lower palm oil prices are also caused by the expected growth in soybean harvests in Brazil, Argentina and the United States. Being a competing vegetable oil, lower soybean prices will automatically influence the price of crude palm oil.

Global palm oil production is dominated by Indonesia and Malaysia. These two countries together account for around 85 to 90 percent of total global palm oil production. Indonesia is currently the largest producer and exporter of palm oil worldwide. Indonesia's oil palm plantation and processing industry is a key industry to the country's economy: the export of palm oil is an important foreign exchange earner and the industry provides employment opportunities for millions of Indonesians.

Indonesia's Palm Oil Production and Export:

    2007   2008   2009   2010   2011   2012   2013¹
Production
(million metric tonnes)
  16.8   19.2   19.4   21.8   23.5   26.5   28.0
Export
(million metric tonnes)
   n.a   14.2   15.5   15.6   16.5   18.1   21.0
Export
(in USD$ billion)
   n.a   15.6   10.0   16.4   20.2   21.6  

¹ indicates forecast
Sources: Food and Agriculture Organization of the United Nations, Indonesian Palm Oil Producers Association (Gapki) and Indonesian Ministry of Agriculture

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