The government of Indonesia plans to adjust its crude palm oil (CPO) export tax policy. Chief Economics Minister Sofyan Djalil said that the government is about to impose a fixed levy of USD $50 per metric ton on CPO exports when CPO prices decline below the government’s threshold of USD $750 per ton, implying that it will become impossible for Indonesian palm oil exporters to ship output without charge. Currently, palm oil exporters can export CPO output duty-free as prices have been below the USD $750 threshold since September 2014.

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It is estimated that Indonesia’s export of crude palm oil (CPO) and its derivatives have fallen in February 2015 due to sluggish demand from India and China, the world’s two largest palm oil importers, while the globe’s soybean output increased (soybean oil is a close substitute to palm oil for food and biodiesel uses). Based on a median of six palm oil growers, analysts and official estimates, Indonesian shipments of palm oil (including palm kernel) fell six percent month-to-month (m/m) to 1.7 million metric tons in February.

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Due to the Indonesian government’s plan to increase biofuel subsidies from IDR 1,500 per liter to IDR 4,000 per liter - in a move to protect the domestic biofuel industry - palm oil futures climbed the most in 28 months. Amid the world’s current low crude palm oil (CPO) prices, Indonesian biofuel producers have it rough as production costs exceed market prices and therefore requested the government to raise biofuel subsidies to offset losses. If approved by Indonesian authorities then this move should result in higher palm oil demand.

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The Indonesian Palm Oil Producers Association (Gapki) believes that it is difficult for Indonesia to achieve the government’s target of collecting USD $36 billion by 2019 through crude palm oil (CPO) exports as several government policies disturb the performance of CPO exports. Moreover, global commodity prices (including palm oil) are still showing a downward trend - hence limiting foreign exchange earnings - as global economic growth remains sluggish. Economic growth of China, a major CPO importer, is expected to slow further this year.

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Indonesia Investments has updated the company profile of plantation firm PP London Sumatra Indonesia (or Lonsum). This Indonesian plantation company, controlled by the Salim Group, focuses on the production of palm oil, rubber, tea and cocoa on its estates on Sumatra, Java, Kalimantan and Sulawesi (covering more than 110,000 hectares in total). Although the global palm oil seed and rubber trade is expected to remain sluggish in 2014, increased sales (and global price) of crude palm oil (CPO) will impact positively on the company’s financial results.

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Indonesia Investments has updated the company profile of Sampoerna Agro in the Indonesian Companies section. Sampoerna Agro, part of the Sampoerna Strategic Group, is one of the country’s leading producers of palm oil and palm kernel. It further produces rubber and sago. It operates a total of 120,225 hectares of oil palm estates, 2,810 hectares of rubber estates and 10,351 hectares of sago estates, mostly located on the islands of Sumatra and Kalimantan, and owns six palm oil mills.

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Indonesia Investments has updated the company profile of Bakrie Sumatera Plantations. The company is an Indonesian integrated agribusiness company that engages in oil palm and rubber plantations. It produces palm oil and its derivatives, and processes natural rubber products as well as oleo-chemicals. The company currently manages oil palm and rubber plantations with a total planted area of 122,024 ha, supported by six palm oil processing plants, four natural rubber processing plants and two oleo-chemicals processing facilities.

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Business players within Indonesia's palm oil sector have expressed concern about a recently introduced law that stipulates limits to plantations sizes, including oil palm plantations. The government of Indonesia issued law Permentan No 98/Permentan/OT.140/9/2013 that sets maximum boundaries to the surface area of eleven commodities. The palm oil industry of Indonesia now argues that targets mentioned in the country's palm oil roadmap cannot be met. For example, the production target of 40 million tons of palm oil by 2020 is in jeopardy.

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The government of Indonesia will be firm to convince the international community at the Asia- Pacific Economic Cooperation (APEC) forum to place crude palm oil (CPO) - including its derivative products - and rubber on the APEC Environmental Goods List (EG List). In the APEC ministerial meeting in Surabaya (East Java), last April, Indonesia failed to include these products on the list. However, the government will continue its lobby during the current APEC meeting by stressing that these products are environmentally friendly.

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The government of Indonesia will lower the export duties on crude palm oil (CPO) from 10.5 percent in August to 9 percent in September if the CPO price continues to stay between USD $800-850 per ton. This lower tax policy is done in order to stimulate export revenues amid persistent weak global commodity prices. The international palm oil market is expected to remain stagnant in August and September. Stockpiles of CPO in Malaysia and Indonesia are projected to rise between September and December 2013.

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The world's two largest crude palm oil (CPO) producers and exporters - Indonesia and Malaysia - signed an agreement on Saturday (21/11) for the establishment of an intergovernmental palm oil council, called the Council of Palm Oil Producer Countries (CPOPC), that aims to control the global CPO supply, stabilize prices, promote sustainable practices in the palm oil industry, and enhance the welfare of oil palm smallholders. Both countries will invest USD $5 million each for the set up of this new council. Its headquarters will be located in Jakarta.

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Indonesia and Malaysia, the world's leading crude palm oil (CPO) producers and exporters, will cooperate for the development of a special economic zone on Indonesian territory to boost the palm oil industry's downstream industry. Private companies will be given incentives to invest in this zone and develop industries to process CPO into olein, a key ingredient for the production of cosmetics and margarine. Furthermore, both countries plan to establish the Council of Palm Oil Producer Countries.

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Crude palm oil (CPO) output in Indonesia, the world’s largest CPO producer and exporter, may decline by 20 percent to 27.5 million tons in 2016 due to the negative impact of the El Nino weather phenomenon. On a positive note, declining CPO output in Indonesia could provide some support for benchmark Malaysian palm prices that fell to a 6.5-year low of 1,836 ringgit last week.

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Indonesia's production of crude palm oil (CPO) in the first six months of 2013 rose 25.64 percent compared to semester I-2012 to 14.7 million tons, which is a little over half of this year's CPO production target. Despite weak global demand for the commodity (accompanied by falling CPO prices), growth was accomplished due to new seeds that became productive and because the total size of Indonesian palm oil estates continues to expand. Productive estates now stand at 9.4 million hectares from 8.7 million hectares last year.

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The recovery in global palm oil prices that seemed to have started last spring, has ended. A few months ago, optimism had colored expectations of many analysts as palm oil prices went up about 10 percent between early May and mid-June, after tumbling 30 percent in 2012 (causing that palm oil was one of the worst performing commodities in terms of price growth last year). However, the palm oil price increase earlier this year was merely the result of falling production rates in Indonesia and Malaysia, the world's largest palm oil producers.

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