Indonesia: Oilseeds and Products Update
Indonesia is experiencing an El Nino event characterized by atypical dryness throughout much of its palm oil production regions. Weather data indicates that although this El Nino is strong, the dryness in Indonesia is not as severe as the 1997/98 El Nino event. Field observations and industry sources confirm that production declines are stronger than typical dry season losses. Sources stress, however, that losses are not on par with yield declines experienced in 97/98. Indonesia’s new levy and biodiesel subsidy are driving domestic palm oil consumption, pushing industrial consumption up from zero in the first half of the year to 2 MMT by the end of 2014/15. Indonesian soybean production has slightly increased as a result of the current El Nino event, as farmers substituted soy for rice in rainfed areas not receiving enough rain to support a third rice crop.
