REPUBLIKA.CO.ID, MEDAN - Indonesia's crude palm oil production is estimated to be lower-than-expected at only 26.2 million tonnes this year, owing to extreme weather that has disrupted harvests in the country. 

"Initially the production was estimated to be between 28 million tonnes and 28.5 million tonnes, but seeing current weather conditions so far, it is estimated that it will only be around 26.2 million tonnes," the General Chairman of the Indonesia Palm Oil Board (DMSI), Derom Bangun, said in response to a question on Friday.

Derom is currently in Germany to hold a dialogue with Indonesian students in Frankfurt and Hamburg and to speak at the Oil World Outlook Conference in Hamburg on Saturday. The drop in production is because domestic harvests slumped due to the extreme weather, he stated. Although production had slipped, Derom said it would still surpass 2012's production of 25.7 million tonnes. 

He said the drop in Indonesias CPO production was one of the factors that had caused the price of the commodity to rise and touch around 900 USD per metric ton, up from around 800 USD per metric ton earlier.

The prices were expected to increase further due to the slumping trend in production. Moreover, domestic CPO consumption had driven up biodiesel production, Derom pointed out. He also noted that the increasing use of biodiesel would lead to a decline in exports, which would trigger further price increases.

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