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Indonesia's October palm oil output edges lower from September

Indonesia's crude palm oil (CPO) output dropped slightly in October from the previous month, a Reuters survey showed, in part due to the choking haze that disrupted travel and agriculture in Southeast Asia for most of the last two months. CPO output in October was 3.01 million tonnes, slightly lower than 3.1 million tonnes in September, according to the median estimate of a survey of four Indonesian industry officials and plantation companies.

Production in the most recent two months is down 3-6 percent from a one-year high of 3.198 million tonnes hit in August. "Due to heavy fires and the haze in October to early November, CPO production was down compared to September," said Sahat Sinaga, executive director at the Indonesian Vegetable Oil Industry Association (GIMNI).

Indonesia and much of the wider Southeast Asian region suffered for weeks over September and October from smoke - known regionally as "the haze" - caused by smouldering forest and peatland fires on the islands of Sumatra and Borneo. The air began to clear over the region from early November because of heavy rains.

Indonesia's peak palm oil output usually runs August to September, and an easing in production in the global top producer is typically expected in the following months as the country heads into the beginning of its wet season in November. Falling output may support benchmark palm prices, which have added 1 percent this year and are trading on Wednesday just up from a three-week low of 2,274 ringgit ($518) per tonne hit earlier in the day.

The Reuters survey pegged CPO exports for October at 2.213 million tonnes, also slightly lower from September. "There is increasing demand from China, Europe and United States," said Fadhil Hasan, executive director at the Indonesian Palm Oil Association (GAPKI). According to the survey, Indonesian palm stocks were at 3.025 million tonnes in October, down from 3.050 million in September.

Indonesia's domestic consumption of the tropical oil was estimated at between 550,000 tonnes and 830,000 tonnes. GAPKI publishes monthly data provided by a professional surveyor that last showed October exports at 2.61 million tonnes. The Reuters survey for October comprises contributions from the Indonesian Palm Oil Board, GAPKI, GIMNI and PT Sinar Mas Agro Resources & Technology, one of the largest listed palm oil companies.

Copyright Reuters, 2015