Palm oil inventories in Indonesiawill probably rise to almost 90 percent of capacity as exports from the largest grower drop after Malaysia set its tariff at zero and as China imposed more stringent rules on shipments.
Stockpiles may gain to 3.5 million metric tons in January from 3.25 million tons in December, according to the median of estimates from two plantation companies, a refiner and an analyst compiled by Bloomberg. Shipments may decline 0.6 percent to 1.54 million tons, while production is seen stable at 2.5 million tons, the medians of estimates from the same four respondents and a third plantation company showed.
Rising inventories would increase pressure on Indonesia to cut its export tax to compete with Malaysia. The second-largest producer set the tariff on shipments at zero this month to drain record reserves and the government has said the rate will be unchanged in February. Indonesia has about 4 million tons of storage capacity, according to Deputy Trade Minister Bayu Krisnamurthi. It doesn’t publish official data on inventories.
“If the government cuts the export tax, it will definitely help boost shipments because we’re still in oversupply in the short term,” Jeffrosenberg Tan, a Jakarta-based analyst at PT Sinarmas Sekuritas, said yesterday.
Attempts by Indonesian exporters to cut reserves are hampered by the zero tariff in Malaysia, causing inventories to stay high at about 3.5 million tons this month, Joko Supriyono, a director at PT Astra Agro Lestari, said by phone from Jakarta on Jan. 15. Supriyono is also secretary-general at the Indonesian Palm Oil Association.