by Elisa Valenta
Country's palm oil exports for the first two months have declined by 20% to 4.93 million, due to a dropping demand as a result of the coronavirus pandemic. Palm oil exports to China have plummeted by half in volume by 57% to 381,000 tonnes, while exports to India and Africa plunged by 188,000 tonnes and 250,000 respectively. If the decline continues, overall export performance could be dragged down by the end of the year, as palm oil has remained Indonesia’s top exporting commodities.
“The dwindling exports to China was a result of the COVID-19 outbreak, while high prices likely caused declining exports to Africa,” says Executive Director of the association Mukti Sardjono in a statement, adding the decline exports to India was caused by the Indian government policy to limit the palm oil imports.
According to GAPKI, palm oil stockpile stood at 4.08 million tonnes by the end of February, down from 4.54 million in January. However, Mukti states, the palm oil players continue business-as-usual practices, amid the coronavirus pandemic, to meet domestic demand. Indonesia is the largest CPO producer in the world, contributing $3.5 billion to non-oil and gas exports in February.
On February, CPO selling prices have continued to fall following the weak demand, resulting in a decline in revenue and net profit for palm oil companies. According to Fitch Ratings recent report, palm oil producers are included in 'High' sector exposure due to the weakening commodity prices, which started in February 2020 following the coronavirus outbreak. Companies that can pass this crisis are those who can manage their liquidity.
Based on the 2019 financial statements issued by eight listed plantation companies, currently, four companies have a liquidity ratio above 100%, while the rest are below 100%. This calculation is obtained by comparing the amount of short-term debt with the total current assets owned by the company.