Indonesia expects exports of palm oil and cocoa to grow significantly in value this year on higher prices and as new investment in the sector boosts output of the commodities, Trade Minister Mari Pangestu said on Wednesday. Rallying commodity prices have benefited Southeast Asia's biggest economy, the world's top producer of palm oil and the third biggest producer of cocoa beans.
Pangestu said exports of palm oil are expected to grow by 16 percent by value in 2011, as new investments worth $1.2 billion are expected to boost production this year, despite fears a planned moratorium on forest clearance would stymie expansion. "The growth in palm oil and cocoa exports will be supported from increasing production and higher prices. We expect prices for the two commodities still in an upward trend this year," said Pangestu at a press conference. "Strong demand from the Middle East and Eastern Europe on top of demand from traditional buyers like China and India will boost palm oil exports," said Pangestu.
Benchmark Malaysian crude palm oil futures touched 3,905 ringgit in intraday trade on Tuesday, a level unseen since March 10, 2008. Palm oil futures climbed 42 percent in 2010, underpinned by concerns over heavy rains curbing supply in top producers Malaysia and Indonesia, as well as dry weather sapping soybean yields in South America.
Palm oil and other edible oils accounted for 12.2 percent of Indonesia's non-oil and gas exports in January-November at $115.94 billion. Exports of cocoa products - butter and powder - are expected to jump by 61 percent by value this year on increasing cocoa bean grinding capacity, Pangestu said, adding that cocoa bean exports are expected to grow by 22 percent by value.
The country's cocoa grinding capacity is expected to hit 280,000 tonnes of beans this year, a jump of 56 percent from an estimated 180,000 tonnes this year, data from the ministry shows. The increase in domestic processing comes after Indonesia slapped an export tax on its cocoa beans from April 2010 in a bid to divert more fermented beans to local grinders. The tax ranges from zero to a maximum 15 percent, calculated on a base price set monthly by the trade ministry.
"The government's cocoa programme also helps increasing cocoa bean output and improving quality," Pangestu said. Coffee exports from the world's second largest robusta producer are expected to grow only marginally by 5 percent because of falling production and growing domestic consumption, said Pangestu. Exports of robusta coffee from the main growing area of Sumatra island fell 28 percent to 247,750.34 tonnes in 2010 from a year ago as prolonged rains cut output.
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