RHB Investment Research Reports

Plantation - Indonesia’s Export Ban Only for RBD Palm Olein

Publish date: Tue, 26 Apr 2022, 09:51 AM
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  • Maintain NEUTRAL; BUY on weakness of pure Indonesian planters – Bumitama Agri (BAL) and London Sumatra (LSIP). Indonesia has clarified that the export ban only affects refined, bleached and deodorised (RBD) palm olein. Consequently, we think the recent selldown of several upstream Indonesian and Singaporean listed planters may be overdone, since CPO exports are allowed again. Downstream Indonesian planters may look for ways to circumvent this ban by exporting more CPO and RBD palm oil, or even export to Malaysia to be refined and re-exported.
  • Export ban only for RBD palm olein. Following Indonesia’s ban on exports of PO effective 28 Apr, the Government has clarified that the export ban is only for RBD palm olein and not for CPO or other derivatives. In 2021, the export volume of RBD palm olein was 12.7m tonnes, and in Jan-Mar 2022, it was 1.5m tonnes.
  • Strict monitoring required. Strict supervision would be needed pertaining to the raw materials for RBD palm olein, namely refined palm oil and CPO, which are not subjected to export restrictions; so that the raw materials for RBD palm olein are still available. If there is a shortage of refined palm oil, then export restrictions can also be extended to the remaining products.
  • Based on this latest development, there are a few outcomes:

    i. Upstream planters will be able to go back to either selling CPO domestically to refiners or exporting it;
    ii. Downstream planters can either not refine their products and just export CPO, or only produce RBD palm oil which is still allowed to be exported; 
    iii. Downstream planters that do not change their product mix could be at a disadvantage as there will be a surplus of RBD palm olein in the domestic market – should they sell the olein to bulk cooking oil producers, they will be able to recover the price difference from the biodiesel fund. However, if they sell the olein to the branded cooking oil market, prices may be negatively affected by the excess supply to the market;
    iv. Indonesian planters that have downstream capacities in Malaysia may also decide to export CPO to Malaysia to be refined there instead;
    v. Malaysian downstream planters would also stand to benefit – less competition from the previously lower priced refined products in Indonesia; potentially more CPO supply from Indonesia will likely result in higher utilisation rates for their refineries.

  • NEUTRAL; pick the winners. With the decline in share prices of the Indonesian and Singaporean listed planters yesterday, there could be a bounce back. We see opportunities to BUY on weakness of pure Indonesian planters on the back of this new development. Maintain NEUTRAL on the sector, advocating a trading strategy. We continue to like the pure planters in Malaysia (Sarawak Oil Palms, Ta Ann), but would now switch to picking up the pure Indonesian planters on weakness (BAL, LSIP).

Source: RHB Research - 26 Apr 2022

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RBD Palm OLEIN curb of chunky 30-40% underplayed by IBs(RHB/AMI/MIB) and news (western Bloomberg/Reuters) for obvious self-serving purposes? Obviously blind to the simple math?

"Exports of crude palm oil and RBD palm oil will still be allowed, according to people familiar with the matter. RBD olein accounts for 30% to 40% of Indonesia’s total palm oil exports."



"According to Refinitiv Eikon, Indonesia exported an average of roughly 620,000 tonnes per month of RBD in 2021, compared to an average of around 100,000 tonnes of crude palm oil."

"According to data from Indonesia's palm oil association (GAPKI), exports of processed CPO in 2021 stood at 25.7 million tonnes, or 75% of total exports of palm products. CPO exports were 2.74 million tonnes in 2021, or 7.98% of the shipments.

In January and February this year, processed CPO exports were 3.38 million tonnes or 79% of exports, while CPO exports were 90,000 tonnes, 2% of the total shipped."



2022-04-26 10:16


This means not export of RBD but CPO can export loh!

But the existing rule of at least 20% CPO must sold for local use still applicable loh!

2022-04-26 11:40


20% rule was scrapped in mid March, replaced by export levy

2022-04-26 12:33

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