OREANDA-NEWS. February 19, 2015. Indonesian crude palm oil output is estimated to have fallen around 5 percent in January from December, hit by wet weather in key growing regions, a survey of leading industry officials showed.

Palm output was 2.056 million tonnes in January in the world's top producer, according to the median estimate in a Reuters survey of four Indonesian industry officials and plantation companies, versus 2.165 million tonnes in December.

"Weather issues in some parts," said Ivy Ng, an analyst at CIMB Investment Bank. "Over in east Malaysia and the Kalimantan side, we've had reports of heavy rain. That could affect the harvesting."

Indonesia and Malaysia, the leading Southeast Asian palm producing countries, have entered their monsoon season, when thunderstorms and flooding can delay harvesting and hinder the transport of fruit to mills.

This contributes to a lower palm production cycle which usually starts in the third or fourth quarter before bottoming out in the first quarter of the following year.

The median estimate for Indonesian crude palm oil (CPO) exports in January was 1.658 million tonnes, down from 1.837 million in December.

"It is probably in line with the drop in production so they have less to sell," said Ng, adding that large buyers had stocked up in December to avoid import tariff increases in January.

India, the world's biggest vegetable oil importer, raised its import tax on crude edible oils and refined oils by 5 percentage points to protect local farmers.

Malaysia's January palm oil end-stocks probably dropped to their lowest level in six months after flooding in the Borneo region coupled with low yields reduced output to the lowest level since February 2011.

Indonesian inventories were seen at 2.413 million tonnes, compared to 2.325 million in December, while domestic consumption was seen at around 625,000 tonnes in January.

"It could be partly due to weaker exports and weaker domestic demand for biodiesel due to the unfavourable crude oil price," Ng said, adding that fewer working days in February may hamper output this month.

A plan to triple Indonesia's biodiesel subsidy will provide some relief to Southeast Asia's beleaguered renewable fuel industry, but it is unlikely to boost demand significantly, given the slump in the price of rival petroleum products.

Reliable palm oil data is difficult to find in Indonesia. The Indonesian Palm Oil Association (GAPKI) publishes monthly data provided by a professional surveyor, which showed 1.97 million tonnes of exports in December.

The monthly Reuters survey includes contributions from GAPKI, the Indonesian Palm Oil Board, the Indonesian Vegetable Oil Industry Association and PT Sinar Mas Agro Resources & Technology, one of the largest listed palm companies.