Palm Oil Prices, After Reaching Record Highs, Gradually Decline

Rising global demand has driven up crude palm oil (CPO) prices throughout this year. This has resulted in increased palm oil prices in the local market.

High domestic demand for palm oil is also due to the mandatory use of palm oil-based biodiesel blends, B20 and B30, in diesel fuel.

According to data from the Commodity Futures Trading Supervisory Agency (Bappebti), the spot price of palm oil in Medan reached a record high of Rp 21,340.46 per kilogram (kg) on the closing trade of November 4, 2021.

CPO prices then closed at Rp 19,743.13 per kg on Thursday, November 18, 2021, down 1.8% from the previous day's close. Compared to the end of December 2020, however, palm oil prices still showed a 36.84% increase.

Based on data from the Ministry of Agriculture, Indonesia's palm oil plantation area is estimated to have reached 15.08 million hectares (ha) in 2021. This comprises 6.08 million ha of smallholder plantations, 8.41 million ha of large private plantations, and 579,660 ha of large state-owned plantations.

Palm oil production this year is estimated at 49.71 million tons. This includes 16.76 million tons from smallholder plantations, 30.72 million tons from large private plantations, and 2.23 million tons from large state-owned plantations.