Highlights

The El Nino weather phenomenon that led to dry conditions throughout 2015 and 2016 has ended. Indonesian weather agency BMKG tells that most production areas have received rain levels characteristic of “normal” conditions since October 2016. Long term analysis for 2017 (August and beyond) thus indicates continued normal conditions with the possibility of a weak El Nino. Post therefore expects that 2017/18 crude palm oil production will increase to 36.5 million metric tons. Post expects that Indonesian soybean imports will continue to grow in 2017/18, based on population growth, stable demand for soy-based food products, and the absence of import restrictions. Coconut production continues to decline, although coconut oil and copra production is sustained by diverting exportable unprocessed coconut for local processing. Peanut production is expected to decline in 2016/17 to 1.12 million metric tons and 2017/18 to 1.07 million metric tons as farmers continue to prefer corn and rice production

Commodities:

Oil, Palm

Planting Area

Post estimates that new Indonesian palm oil plantings have slowed, with new acreage expected to increase by about .5 percent in 2017/18 (approximately 50,000 hectares). This is down from 2016/17 plantings, which grew by 1 percent, or 100,000 hectares. The decline in new plantings is attributable to several factors, most important that the Ministry of Environment and Forestry has not issued permits. Industry sources cite regulations 8/2015 and 57/2016 as the impetus for this decision. Regulation 8/2015 continues Indonesia’s forest and peatland moratorium, while 57/2016 tightens controls on peatland management. Additionally, dry weather and land title disputes also hinder new planting.

Industry contacts state that replanting of existing plantations is proceeding at a slow, but nonetheless steady pace. Although dry weather throughout 2015 and 2016 created less-than-ideal conditions for establishing new trees, growers note that plantings are a two year process, with orders placed to nurseries well in advance. As a result, replacement plantings have continued at a relatively steady pace. Although the return to normal weather conditions in 2017 is expected to favor replanting, seed sales data for 2016 indicates a 20 percent drop to 76 million seed from 94 million in the previous year.

Production

The El Nino weather phenomenon that led to dry conditions throughout 2015 and 2016 has ended. Indonesian weather agency BMKG tells that most production areas have received rain levels characteristic of “normal” conditions since October 2016. Probability of normal conditions is expected to remain high through August 2017. They expect that the probability of El Nino conditions will rise later in 2017, but that an El Nino event is less likely than continued normal conditions. Long term analysis for 2017 (August and beyond) thus indicates continued normal conditions with a possibility of a weak El Nino.

Based on normal weather conditions and expected plantation recovery, Post expects that 2017/18 production should increase to 36.5 million metric tons. This estimate includes the assumption that yields will grow as young and replanted plantations approach peak productivity. Post’s 2016/17 production estimate is revised to 34 million tons. Exceptionally high production in December 2016. This anomaly is not indicative of a longer trend. Specifically, plantation managers explain that during the drought period, oil palms in the region continued to produce fresh fruit bunches which did not ripen and remained unharvested. Following three months of rain, the necessary conditions for fresh fruit bunch ripening occurred, resulting in a short term production spike.

Consumption

Industrial palm oil consumption is driven by the Indonesian biodiesel market. Post expects that biodiesel consumption will not change significantly between 2017/18 and 2016/17 for several reasons and is therefore set at 3.6 million metric tons for both marketing years. Biodiesel consumption is supported through a subsidy on biodiesel which is funded by an export levy on palm oil exports. Levy administrators report that they foresee the possibility of declining levy revenues as Indonesian exporters increase their production of value added CPO products which pay a lower levy than regular CPO. Palm oil producers, however, disagree with this assessment, noting that they have not witnessed any significant changes in the biodiesel industry which would result in the growth value-added CPO products. Additionally, some growers speculate that late 2017 could see larger production increases due to sustained favorable production conditions. A production jump could lead to lower CPO prices, increased exports, greater levy revenues, and a smaller price spread between CPO and fossil fuels. Other factors to consider over the long term include the possibility of extending biodiesel subsidies to privately owned fuel companies. This has been long debated but the GOI has yet to act on it due to cost constraints. Likewise, the GOI continues to list biodiesel-based electricity generation as a high priority. Indonesia’s state-owned power company, however, reports that biodiesel is a low priority, accounting for a negligible portion of the country’s electricity generation. The GOI is considering a revision to the biodiesel pricing index, which would result in a lower biodiesel price. As of March 2017, however, no regulation has been issued and there is no indication that this endeavor will move forward. Human consumption of CPO continues to steadily increase with the pace of population growth. Post estimates that human consumption will reach 5.7 million metric tons in 2016/17 and 5.75 million metric tons in 2017/18. Feed use is revised upwards slightly in support of continued growth in Indonesia’s poultry industry. Post thus estimates 2016/17 feed consumption at 340 thousand metric tons and 345 thousand metric tons in 2017/18.

Trade

Trade data shows that calendar year 2016 exports fell by 5.4 percent compared to 2015. The export decline was likely due to supply constraints resulting from dry weather. This is supported by price data which shows that the average CPO price rose 13 percent to 640 dollars in 2016 from 565 dollars the previous year. Rising CPO prices narrowed the soy-CPO price spread, which fell to 26 dollars in 2016 (based on annual average price). With CPO prices approaching soy oil prices, some buyers made the switch to soy oil, thus diminishing CPO export performance. Post expects a slight increase in 2017/18 exports under the anticipation of improving production and growing stocks. Under these conditions, 2017/18 exports are set at 25.5 million metric tons, a 500,000 ton increase over 2016/17. Factors to watch in the coming year will be Indian, Chinese, and European demand, as well as potential growth in Pakistan and Bangladesh. CPO producers are emphasizing that potential production increases in the last quarter of 2017 could fuel export growth. Less likely but equally important will be the price spread between fossil fuels and biodiesel. In the event that fossil fuel prices rebound, demand for biodiesel could increase. 2015/16 export data remains incomplete, with data only published through July 2016. Post thus revises its 2015/16 export estimate to 22.905 million metric tons based on GOI data (BPS).

Stocks

Ending stocks are expected to rise to 2.932 MMT in MY 2017/18 from 1.677 MMT in MY 2016/17, based on recovering production. 2015/16 ending stocks are slightly revised to 2.317 MMT based on revised export estimates.

Commodities:

Oilseed, Palm Kernel

Production

Palm kernel (PK) production is determined by fresh fruit bunch (FFB) yields. MY 2016/17 and MY 2017/18 CPO production are estimated at 34 MMT and 36.5 MMT. Assuming a 23 percent oil extraction rate (OER), FFB production is estimated at 150 MMT in MY 2016/17 and 161.5 MMT in MY 2017/18. PK accounts for about six percent of total FFB weight, indicating that PK production will reach 9 MMT in MY 2016/17 and 9.6 MMT in MY 2017/18.

Consumption

PK is used by millers, who crushed PK for palm kernel oil (PKO) and palm kernel meal (PKM). Post expects local millers will process 8.8 MMT of PK in MY 2016/17 and 9.35 MMT in MY 2017/18.

Trade

Post revises MY 2015/16 trade figures to 255 thousand metric tons to reflect final export data. Post notes that 2015/16 PK exports jumped following decreases in Indonesia’s export levy for PK. MY 2016/17 and MY 2017/18 are expected to reach 140 thousand MT exports in each year, based on industry expectations that the levy on PK will increase again.

Stocks

PK ending stocks of PK are estimated to rise to 55,000 MT in MY 2017/18 as result of the increasing CPO production.

Oil, Palm

Market Begin Year

Indonesia

2015/2016

2016/2017

2017/2018

Oct-15

Oct-16

Oct-17

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Planted

0

0

0

0

0

0

Area Harvested

8965

8965

9200

9200

0

9300

Trees

0

0

0

0

0

0

Beginning Stocks

2734

2734

2214

2317

0

1677

Production

32000

32000

35000

34000

0

36500

MY Imports

8

8

0

0

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

34742

34742

37214

36317

0

38177

MY Exports

23000

22905

25700

25000

0

25500

MY Exp. to EU

3500

3500

3500

3500

0

3500

Industrial Dom.Cons.

3700

3600

3650

3600

0

3650

Food Use Dom. Cons.

5500

5600

5500

5700

0

5750

Feed Waste Dom.Cons.

328

320

320

340

0

345

Total Dom. Cons.

9528

9520

9470

9640

0

9745

Ending Stocks

2214

2317

2044

1677

0

2932

Total Distribution

34742

34742

37214

36317

0

38177

Production
Oil, Palm Kernel

Indonesia is expected to crush 8.8 MMT and 9.35 MMT of PK in MY 2016/17 and 2017/18. As a result, assuming an approximate extraction rate of 44 percent, PKO production will reach 3.85 MMT in 2016/17 and 4.1 MMT 2017/18 in each marketing year.

Consumption

PKO is mainly used by oleo chemical industry. Post estimates industrial consumption will reach 1.85 MMT in MY 2016/17 and 1.87 MMT in MY 2017/18. Small quantities of PKO are used by Indonesia’s food processing industry also. Overall domestic consumption is expected to grow to 2.21 MMT in MY 2017/18.

Trade

Indonesian PKO exports are expected to grow from 1.65 MMT in MY 2016/17 to 1.7 MMT in MY 2017/18. Traders anticipate increasing exports as production and stocks are expected to increase.

Stocks

Ending stocks are estimated to rise to 256,000 MT in MY 2017/18, as production outpaces use.

Oil, Palm Kernel

Oil, Palm Kernel

Market Begin Year

Indonesia

2015/2016

2016/2017

2017/2018

Oct-15

Oct-16

Oct-17

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Crush

8450

8200

9055

8800

0

9350

Extr. Rate, 999.9999

0.4379

0.439

0.4395

0.438

0

0.439

Beginning Stocks

248

248

148

46

0

66

Production

3700

3600

3980

3850

0

4100

MY Imports

0

0

0

0

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

3948

3848

4128

3896

0

4166

MY Exports

1700

1662

1700

1650

0

1700

MY Exp. to EU

320

265

320

240

0

250

Industrial Dom.

1800

1820

1900

1850

0

1870

Food Use Dom. Cons.

300

320

350

330

0

340

Feed Waste Dom.

0

0

0

0

0

0

Total Dom. Cons.

2100

2140

2250

2180

0

2210

Ending Stocks

148

46

178

66

0

256

Total Distribution

3948

3848

4128

3896

0

4166

Meal, Palm Kernel

Production

PKM production is derived from PK and PKO production. Assuming palm kernel crush yields of 53 percent meal and four percent waste, PKM production is estimated to reach 4.7 MMT and 4.95 MM in MY 2016/17 and MY 2017/18.

Consumption

Post expects domestic consumption to increase to 615,000 MT in MY 2016/17 to 620,000 MT in MY 2017/18. Domestic consumption of PKM is limited due to limited ruminant feed use and shipping cost constraints. Distributing meal within Indonesia is more expensive than importing the ingredient equivalent. The small vessels and limited inter-island trade infrastructure diminish competition with imports that achieve greater economies of scale.

Trade

Indonesian PKM production is primarily exported. As a result, Indonesia’s expected production increase is projected to result in increased exports. Post thus sets MY 2016/17 exports at 4.1 MMT and MY 2017/18 at 4.3 MMT.

Stocks

Post expects PKM ending stocks to increase from 114,000 MT in MY 2016/17 to 144,000 in MY 2017/18, as growing CPO production outpaces use.

Meal, Palm Kernel

Meal, Palm Kernel

Market Begin Year

Indonesia

2015/2016

2016/2017

2017/2018

Oct-15

Oct-16

Oct-17

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Crush

8450

8200

9055

8800

0

9350

Extr. Rate, 999.9999

0.5266

0.530

0.5356

0.534

0

0.529

Beginning Stocks

261

261

131

129

0

114

Production

4450

4350

4850

4700

0

4950

MY Imports

0

0

0

0

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

4711

4611

4981

4829

0

5064

MY Exports

4000

3872

4250

4100

0

4300

MY Exp. to EU

1650

1425

1650

1500

0

1600

Industrial Dom.

0

0

0

0

0

0

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom.

580

610

600

615

0

620

Total Dom. Cons.

580

610

600

615

0

620

Ending Stocks

131

129

131

114

0

144

Total Distribution

4711

4611

4981

4829

0

5064

Oilseed, Soybean

Production

Soybean planting area is expected to decline in 2017/18 in response to increasing corn plantings and the expected return of wetter weather conditions. Soybean production experienced increases (yield) during Indonesia’s 2015 and 2016 El Nino events as the dry weather improved bean ripening conditions and lowered pest and disease threats. Strong corn prices however, coupled with increased precipitation, should push growers to favor corn and rice over alternate crops. As a result, soybean area harvested is declining on Java, the main soybean planting area. Likewise, total production is expected to decline to 540 thousand metric tons in 2017/18 from 565 thousand metric tons in 2016/17. 2016/17 production is set to decline from 2015/16 due to the same factors as described for 2017/18 (wetter weather and grower preference to plant corn).

Soybean growers typically plant soybean as a secondary crop on non-irrigated lands. They are primarily planted as a leguminous rotation, and receive minimal inputs. Thus, yields remain low. Indonesian soybean producers indicate that policy measures have further encouraged them to switch to corn when possible. In particular, they cite Government of Indonesia regulation 21/2016, which sets a benchmark farm gate price for corn. Growers consistently point to firm corn prices as their reason to not plant soy. Field travel confirms this, with numerous farmers reporting that they are planting corn and will continue to plant corn under the expected rainier weather conditions.

Consumption

Indonesian soybean consumption is stable. Soybean products such as tempeh and tofu are staple proteins for Indonesians, and as such, Indonesian soybean consumption is primarily oriented at human use. Prices remain low, especially compared to meat prices. Additionally, there have been no policy-related supply disruptions and tariffs remain at zero. As a result, Post expects soybean human consumption to continue to increase with population growth.

A marginal increase in full fat soybean use is possible following policy-driven declines in feed corn and wheat. The increase will be small, as most energy from lipid sources can be obtained through lower cost palm oil. As a result, Post expects that soybeans intended for animal feed uses will grow to 40 thousand metric tons in 2016/17 and 2017/18 from the 30 thousand in prior years. Overall consumption is expected to reach 2.9 million metric tons in 2016/17 and 2.99 million metric tons 2017/18, reflecting the above mentioned factors.

Trade

Indonesia imports more than 80 percent of its soybeans, with the United States acting as the primary supplier. Post expects that soybean imports will continue to grow in 2017/18, based on population growth/growing consumption estimates, stable demand for soy-based food products, and the absence of import restrictions. As a result, imports are expected to rise to 2.45 million metric tons in MY 2017/18. 2016/17 trade estimates remain unchanged at 2.32 million metric tons, reflecting trade data through December 2016.

Oilseed, Soybean

Market Begin Year

Indonesia

2015/2016

2016/2017

2017/2018

Oct-15

Oct-16

Oct-17

USDA Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Planted

490

490

480

480

0

470

Area Harvested

440

440

430

430

0

420

Beginning Stocks

65

65

64

109

0

93

Production

580

580

565

565

0

540

MY Imports

2250

2295

2400

2320

0

2450

MY Imp. from U.S.

2200

2269

2300

2300

0

2400

MY Imp. from EU

0

0

0

0

0

0

Total Supply

2895

2940

3029

2994

0

3083

MY Exports

1

1

1

1

0

1

MY Exp. to EU

0

0

0

0

0

0

Crush

0

0

0

0

0

0

Food Use Dom. Cons.

2800

2800

2935

2860

0

2950

Feed Waste Dom.

30

30

30

40

0

40

Total Dom. Cons.

2830

2830

2965

2900

0

2990

Ending Stocks

64

109

63

93

0

92

Total Distribution

2895

2940

3029

2994

0

3083

Meal, Soybean

Production

Indonesia does not produce soybean meal (SBM), relying entirely on imports for its soybean meal requirements. The majority of full fat soybeans are used for human foods such as tempeh and tofu, and its vegetable oil demand is met by local palm oil production. As a result there is no production of SBM as a byproduct.

Consumption

Indonesian SBM consumption is driven by the animal feed sector. This consists of poultry feed (83 percent), aquaculture (11 percent) and swine and cattle (6 percent). Soybean meal constitutes 15 to 20 percent of livestock feed. CY 2017 feed production growth is expected to slow. While CY 2016 growth reached approximately seven percent, CY 2017 growth would not likely reach 2016 levels due to import restrictions on corn and feed grade wheat. Thus, although feed mill capacity continues to expand, mills are expected to run at about 70 percent capacity . Post thus estimates total SBM consumption will increase to 4.44 MMT in MY 2017/18, a slight increase over 4.39 MMT in MY 2016/17.

Trade

Indonesian SBM imports are expected to grow, reflecting increasing poultry and aquaculture sector consumption. Post thus expects imports to reach 4.3 MMT in MY 2016/17 and 4.45 MMT for MY 2017/18. Indonesia’s SBM imports primarily originate in Brazil and Argentina. 2015/16 final data is not yet available.

Stocks

Indonesian SBM ending stocks are expected to increase slightly to 175,000 in MY 2017/18 based on slower feed industry consumption growth.

Meal, Soybean

Market Begin Year

Indonesia

2015/2016

2016/2017

2017/2018

Oct-15

Oct-16

Oct-17

USDA Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Crush

0

0

0

0

0

0

Extr. Rate, 999.9999

0

0

0

0

0

0

Beginning Stocks

225

225

200

255

0

165

Production

0

0

0

0

0

0

MY Imports

4275

4100

4600

4300

0

4450

MY Imp. from U.S.

110

28

110

40

0

40

MY Imp. from EU

0

0

0

0

0

0

Total Supply

4500

4325

4800

4555

0

4615

MY Exports

0

0

0

0

0

0

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom.

0

0

0

0

0

0

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom.

4300

4070

4600

4390

0

4440

Total Dom. Cons.

4300

4070

4600

4390

0

4440

Ending Stocks

200

255

200

165

0

175

Total Distribution

4500

4325

4800

4555

0

4615

Oilseed, Copra

Production

The coconut production is declining at a steady rate in Sulawesi. Several factors have been cited as the source of these declines, including conversion of land to non-agricultural uses, low grower profits, and demand for coconut tree wood. Most important, however, are declining yields.

Most of Sulawesi’s coconut plantations are well beyond their 35 year prime production periods. Faced with aging plantations, most farmers are disinterested in replanting younger, more productive cultivars. These farmers, confronted with physically demanding work and low returns, see little incentive in the cost of replanting, or making long term investments in higher yielding cultivars. Given their risk profile, coconut farmer behavior is categorized by low-maintenance cultivation techniques resulting in low yields, inconsistent supplies, and aging plantations. These practices are followed by well over 90 percent of Sulawesi’s coconut farmers.

Coconut oil processors, faced with declining copra production, are struggling to source copra. Given that most coconut farms are organized as smallholdings, (many featuring mountainside terrains and varying access to roads), investors see few options to purchase and consolidate farms. Processors are therefore implementing various strategies, including aggressive purchasing programs, the diversification of coconut product processing (bottled coconut water), and additional extension efforts with the intention of providing better returns to producers. Additionally, some processors are seeking innovative ownership agreements, such as leases on trees, thereby handing over production of the coconuts to the processors, while allowing farmers to maintain land ownership. Coconut production and non-copra use of coconut (for example desiccated coconut for the confectionary industry) determines the availability of Indonesian copra. Like palm oil, MY 2015/16 production dropped due to El Nino weather conditions. Additionally, aging plantations are experiencing declining yields. As a result, MY 2017/18 copra production is expected to decline to 1.57 MMT, compared to 1.58 MMT the previous year.

Two thirds of Indonesia’s coconut production is located on Sumatera, Java and Sulawesi Industry contacts note, however, that a large portion of the Sumatran crop is exported for processing overseas. In order to maintain copra and coconut oil production, it is likely that small portions of exportable supplies of unprocessed coconuts are being retained in Indonesia for further processing.

Consumption

Indonesia’s coconut oil (CNO) industry consumes approximately 97 percent of Indonesia’s copra production. CNO mills are expected to process 1.53 MMT of copra in both MY 2016/17 and 2017/18.

Trade

Although Indonesia exports a large quantity of raw coconut, copra exports are low, as most copra is processed domestically. Indonesia only exports small quantities of copra to Bangladesh and the Philippines. Thus, MY 2015/16 exports are revised to 20 thousand metric tons, based on final trade data. 2016/17 and 2017/18 are set at 25 thousand metric tons, assuming typical export performance.

Stocks

Post expects ending stocks to remain in the range of 50,000 metric tons. Large variations are unlikely given declining production and minimal trade. Thus ending stocks are estimated at 73 thousand metric tons in MY 2017/18 and 63 thousand metric tons in 2016/17. MY 2015/16 ending stocks are estimated at 43 thousand metric tons based on final trade data.

Oilseed, Copra

Market Begin Year

Indonesia

2015/2016

2016/2017

2017/2018

Oct-15

Oct-16

Oct-17

USDA Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Planted

0

0

0

0

0

0

Area Harvested

3780

3780

3760

3760

0

3700

Trees

0

0

0

0

0

0

Beginning Stocks

8

8

4

43

0

63

Production

1590

1590

1580

1580

0

1570

MY Imports

0

0

0

0

0

0

MY Imp. from U.S.

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

1598

1598

1584

1623

0

1633

MY Exports

25

20

30

25

0

25

MY Exp. to EU

0

0

0

0

0

0

Crush

1565

1530

1540

1530

0

1530

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom.

4

5

4

5

0

5

Total Dom. Cons.

1569

1535

1544

1535

0

1535

Ending Stocks

4

43

10

63

0

73

Total Distribution

1598

1598

1584

1623

0

1633


Oil, Coconut

Production

Coconut oil (CNO) production is based on copra production. Post thus estimates that the 2017/18 crush will reach 1.53 MMT, resulting in 970,000 MT of CNO. Post estimates that CNO production will remain the same in all three marketing years.

Consumption

Indonesia’s industrial sector consumes limited quantities of CNO, as inexpensive palm oil products are produced domestically and are readily available. Post expects total domestic consumption at 245,000 MT in MY 2017/18, reflecting limited growth from 240,000 MT in MY 2016/17.

Trade

Most CNO production is exported. Exports are expected to decline to 610,000 MT in both MY 2016/17 and MY 2017/18, as competition from lower-cost palm kernel oil is expected to offset oleo chemical industry demand for coconut oil.

Stocks

Post estimates that CNO ending stocks will rise to 384,000 MT in MY 2017/18 as result of stagnant export performance and domestic consumption.

Oil, Coconut

2015/2016

Oct-15

2016/2017

Oct- 16

2017/2018

Oct 17

Indonesia

USDA Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Crush

1565

1530

1540

1530

0

1530

Extr. Rate, 999.9999

0.6358

0.634

0.6351

0.634

0

0.634

Beginning Stocks

38

38

83

149

0

269

Production

995

970

978

970

0

970

MY Imports

0

0

0

0

0

0

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

1033

1008

1061

1119

0

1239

MY Exports

650

624

700

610

0

610

MY Exp. to EU

150

100

150

90

0

90

Industrial Dom.

190

125

190

130

0

135

Food Use Dom.Consumption

110

110

100

110

0

110

Feed Waste Dom.

0

0

0

0

0

0

Total Dom. Cons.

300

235

290

240

0

245

Ending Stocks

83

149

71

269

0

384

Total Distribution

1033

1008

1061

1119

0

1239


Meal, Copra

Production

Like CNO, copra meal production is based on copra production and crush rates. Copra meal production is therefore estimated at 515,000 metric tons, based on the estimate that Indonesia will crush 1.53 million metric tons of copra in all three marketing years.

Consumption

Copra meal is mainly used as feed ingredient. Demand for copra meal is expected to grow to 210,000 MT in MY 2016/17 and 220,000 MT in MY 2017/18, in sync with the general trend of growing animal feed production in Indonesia.

Trade

Post estimates that copra exports will reach 240,000 MT in MY 2016/17 and 245,000 MT in MY 2017/18. Small growth is attributable to traders’ comments that Indonesian origin copra meal is slightly more competitive compared to neighboring origins.

Stocks

2017/18 copra meal ending stocks are expected to increase to 201,000 MT as result of slow export growth and feed industry demand.

Meal, Copra

Market Begin Year

Indonesia

2015/2016

2016/2017

2017/2018

Oct-15

Oct-16

Oct-17

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Crush

1565

1530

1540

1530

0

1530

Extr. Rate, 999.9999

0.3323

0.3366

0.3305

0.337

0

0.337

Beginning Stocks

5

5

6

84

0

150

Production

520

515

509

515

0

515

MY Imports

1

1

1

1

0

1

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

526

521

516

600

0

666

Feed Export

230

237

240

240

0

245

MY Exp. to EU

0

0

0

0

0

0

Industrial Dom.

0

0

0

0

0

0

Food Use Dom. Cons.

0

0

0

0

0

0

Feed Waste Dom.

290

200

270

210

0

220

Total Dom. Consumption

290

270

210

220

0

200

Ending Stocks

6

6

150

201

0

84

Total Distribution

526

516

600

666

0

521

ProductionOilseed, Peanut

Java is home to approximately 74 percent of Indonesia’s peanut production area. The same area is also a key production area for food crops, such rice and corn. Peanut production on Java, like soybean, is primarily used as a leguminous rotation during periods when more lucrative crops such as rice and corn cannot be grown. As a result, it is generally viewed as a secondary crop, although farmers report their preference for it over soybeans as peanut yields exceed soybean yields.

Current agricultural policy favors corn production. As a result, Indonesian farmers are increasing corn plantings in response to strong prices. Irrigated land is dedicated almost entirely to rice and corn production, while non-irrigated land is primarily planted to corn or left fallow. As a result peanut production is expected to decline in 2016/17 and 2017/18 to 1.12 and 1.07 million metric tons.

Consumption

Indonesia’s peanut market can be broken down into three broad categories: traditional, snack foods, and confectionary/spreads. The traditional market consumes approximately 70 percent of Indonesia’s peanut imports. Traditional market peanut sales are primarily intended for grinding and are typically used as condiments and sauces. The industry standard grade (size) for traditional market peanuts is 80/90 peanuts per ounce. The snack food market consumes about 20 percent of peanut imports. Snack foods peanuts typically require small grade peanuts, measured as 140/160 peanuts per ounce and sometimes referred to as “Java grade.” Java grade peanuts are characterized by their small round shape, which is necessary for fried coating applications. Finally, confectionary and spread manufacturers consume the remaining 10 percent of peanut imports. These consumers prefer larger grade peanuts, measuring 60/70 peanuts per ounce. Note that the market distinguishes between western style peanut butter spreads and local peanut butter used as a sauce and condiment base in traditional cooking. Indonesia’s peanut market is mature, with minimal growth limited to specific segments. Based on declining production due to Indonesian farmer’s increasing cultivation of corn, peanut consumption is expected to decline to 1.375 million metric tons in 2016/17 and 1.34 in 2017/18.

Trade

According to Global Trade Atlas, Indonesian peanut imports are sourced primarily from India, China and some African countries. Nearly all imports originate in India. Chinese origin exports are reported to be Indian origin peanuts which are processed (blanched) in China and then re-exported. Only small quantities originate in Africa. Importers note that African exports, as well as other competing origins (the United States or Argentina), rarely ship to Indonesia due to freight costs and shipping times. Importers also note concerns that perishability is a serious concern, and feel that the risks associated longer shipping times prevents them from buying peanuts outside of India and Southeast Asia.

Considering stagnant demand, post set peanut imports at 150,000 MT both in MY 2016/17 and MY 2017/18. 2015/16 imports are set at 232 thousand metric tons based on final trade data.

Stocks

Indonesian ending stocks are expected to reach 58 thousand metric tons in MY 2016/17 and 36 thousand metric tons in MY 2017/18, following declining production.

Oilseed, Peanut

2015/2016

2016/2017

2017/2018

Market Begin Year

Indonesia

Jan-16

Jan-17

Jan-18

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Planted

0

0

0

0

0

0

Area Harvested

615

615

610

600

0

590

Beginning Stocks

90

90

77

65

0

58

Production

1130

1130

1125

1120

0

1070

MY Imports

250

232

250

250

0

250

MY Imp. from U.S.

0

0

0

0

0

0

MY Imp. from EU

0

0

0

0

0

0

Total Supply

1470

1452

1452

1435

0

1378

MY Exports

8

2

5

2

0

2

MY Exp. to EU

0

0

0

0

0

0

Crush

50

50

50

50

0

50

Food use Dom. Cons.

1240

1240

1235

1235

0

1200

Feed Waste Dom.

95

95

90

90

0

90

Total Dom. Cons.

1385

1385

1375

1375

0

1340

Ending Stocks

77

65

72

58

0

36

Total Distribution

1470

1452

1452

1435

0

1378