The supply surprise
April 30th, 3019
⏰ 1 minute read
⏰ 1 minute read
Analyze
We’ve been quietly doing something we don’t normally do. We’ve analyzed our competitors. Normally we focus on just ourselves. Now we looked deep into operations & financial data of the largest 10 Indonesian producers listed in Singapore & Jakarta. Together they represent 23% or almost 1/5th of production. Here’s part 1 of what we found.
2 down
The combined total fruit production of the 10 companies reached well over 30m tons last year. That’s an average yield of just below 19 tons per hectare for the group which includes both young & old. We’ve looked at the years from 2015 when EHP began. You might not be surprised to learn production fell in 2016 & was still lower than 2015 by the end of 2017.
1 up.
You might also not be surprised to learn that production then surged higher in 2018. The increase in one year was 15%, but as the earlier years were down, that means the total production increase from 2015 is just 12%. That’s only 4% a year. & comes mainly from an increase in mature area which was planted before 2015.
Planting
To see what’s coming in the future, we need to switch to looking at how the total planted area has increased from 2015. In 3 years, the total planted area has only grown by 2.4%, & only a couple of companies grew more than 5%. By 2018 the planted area growth even turned negative as re planting began, with no one company growing at above 1%!
1.2%
As yields are already quite high, 2019 into 2020 growth will rely on new plantings in 2016 which grew at only 1.2%. Thus our prediction for production growth in Indonesia this year is only 1.2%. Presumably total palm oil growth will be even slower than that. Oil World currently predicts 4% growth this year so there may
be a negative supply surprise.
Sebastian
We’ve been quietly doing something we don’t normally do. We’ve analyzed our competitors. Normally we focus on just ourselves. Now we looked deep into operations & financial data of the largest 10 Indonesian producers listed in Singapore & Jakarta. Together they represent 23% or almost 1/5th of production. Here’s part 1 of what we found.
2 down
The combined total fruit production of the 10 companies reached well over 30m tons last year. That’s an average yield of just below 19 tons per hectare for the group which includes both young & old. We’ve looked at the years from 2015 when EHP began. You might not be surprised to learn production fell in 2016 & was still lower than 2015 by the end of 2017.
1 up.
You might also not be surprised to learn that production then surged higher in 2018. The increase in one year was 15%, but as the earlier years were down, that means the total production increase from 2015 is just 12%. That’s only 4% a year. & comes mainly from an increase in mature area which was planted before 2015.
Planting
To see what’s coming in the future, we need to switch to looking at how the total planted area has increased from 2015. In 3 years, the total planted area has only grown by 2.4%, & only a couple of companies grew more than 5%. By 2018 the planted area growth even turned negative as re planting began, with no one company growing at above 1%!
1.2%
As yields are already quite high, 2019 into 2020 growth will rely on new plantings in 2016 which grew at only 1.2%. Thus our prediction for production growth in Indonesia this year is only 1.2%. Presumably total palm oil growth will be even slower than that. Oil World currently predicts 4% growth this year so there may
be a negative supply surprise.
Sebastian
