By Andi Abdussalam
Jakarta, Jan 29 (ANTARA) - Business players and farmers are giving cautious response to signs of improving crude palm oil (CPO) prices after plunging by over 60 percent from about US$1,200 per ton in March to about US$400 per ton in December last year.
"Although the price is going up it is believed that it would not reach last year's level when it was recorded at US$1,000 per ton," Treasurer of the Indonesian Crude Palm Oil Producers Association (Gapki), Laksamana Adiyaksa, said here on Wednesday.
The price of CPO is predicted to continue its upward trend in response to increasing demand in the world market due to declining stocks.
"The increase in the price of CPO this month is because stocks in Europe are declining after high consumption during the winter season at the end of 2008," Adiyaksa said.
He said that it was predicted that the latest price would reach US$600 per ton while the price of CPO last year was US$1,000 per ton.
Timbas Prasad Ginting, a palm oil businessman, said that the price of fresh fruit bunches (TBS) this week had reached Rp1,092 per kg from the earlier price of Rp1,048 per kg. The price of CPO has also increased to Rp6,323 per kg.
The prices of TBS and CPO this week significantly increased if compared with those in the January 7 - 13, 2009 period which were recorded at Rp963.52 per kg and Rp5,031.42 per kg respectively.
Companies dealing with CPO business remain cautious however, despite signs of increasing prices.
Foods and agribusiness firm Sinarmas still restrained from expanding its investment in this sector as it will still look to the impact of the current world economic crisis.
"In facing this business, we have to be conservative and be prudent for the time being, but if our cash flow performance is good we will increase our investment," Sinarmas Chief Executive Officer Franky O. Widjaja said on Wednesday.
Sinarmas made additional investment worth US$200 million, including for the expansion by 20,000 hectares of its oil palm plantations. For this year, the company only sets aside US$100 for plantation expansion and construction of a CPO factory.
"Sinarmas has begun its CPO business in eastern Indonesian regions and is planning to open a new plantation on a 2,000 hectare plot in Jayapura," Franky Widjaja said.
The gloomy CPO business condition last year caused CPO exporters in Sumatra temporarily stopped their overseas shipments pending the stabilization of CPO prices in the world market.
"Except to meet contract obligations, exporters have temporarily ceased overseas shipments to avoid losses which could be caused by the present CPO price fluctuations," a CPO exporter said in North Sumatra, in March 2008.
In the meantime, PT Astra Agro Lestari (AALI), a leading CPO exporter, said its CPO exports in 2008 dropped if compared with the volumes of its shipments of the commodity in 2007.
Investor Relations officers Thajo DA of AALI said in the company's investor bulletin that AALI's exports of the commodity in 2008 dropped 25.2 percent to 110,614 tons from 147,815 tons a year earlier.
However, AALI's CPO sales at home increased in 2008 13.2 percent to 970,728 tons from 857,825 tons in 2007. This was due to increasing domestic demand for CPO. It is expected that domestic demand would continue to increase this year.
Derom Bangun, chairman of the Indonesian Crude Palm Oil Council (DMSI) and adviser of the Indonesian Crude Palm Oil Businesses Association (Gapki), said demand for CPO at home could increase to 6 million to 6.6 million tons.
"With the increase in domestic demand, exports could be reduced so that it would also reduce pressure on the world market," he said after the launch of the International Conference & Exhibition on Palm Oil (ICE-PO 2009) here on Wednesday.
Indonesia's crude palm oil production in 2009 is estimated to total 20 million tons, of which 4.5 million to 5 million tons will be consumed at home and the rest exported.
He said Indonesia's CPO exports to Europe were being hampered by a regulation the European Union had adopted with regard to the impact of fossil and vegetable fuel oil gases on the greenhouse effect.
In the meantime, the government is still imposing a zero percent export tax on CPO due to the low price of the commodity in the world market.
CPO exports for February 2009 shipments will be subjected to zero percent export taxes because the CPO reference price is still less than US$750 per ton, according to Director General for External Trade of the Ministry of Trade Diah Maulida.
"Export tax for CPO exports is still set at zero percent, the same as those two months ago because the CPO reference price in the world market is only US$555.98 per ton," she said here on Tuesday.
Since December 2008, the government has not collected export taxes for CPO exports (export tax zero percent) because the price of CPO in the international market fell to about US$400 per ton.***2*** (T.A014/A/HAJM/B003) 2. 21:00. (T.A014/A/A014/B003) 29-01-2009 21:07:56
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