CAIRO - Being the world's largest palm oil producer, Indonesia is awaiting the holy fasting month of Ramadan to boost its oil shipments to meet demand from Muslim and world countries, the Jakarta Globe reported on Sunday, July 1.
Global demand, either from India or other countries, will usually increase by 15 percent to 20 percent during the festive seasons, said Derom Bangun, a deputy chairman at the Indonesian Palm Oil Board, a group of growers and refiners.
This will support prices even as the pressure from the European crisis is still quite strong.
Ramadan is the holiest month in Islamic calendar.
In Ramadan, adult Muslims, save the sick and those traveling, abstain from food, drink, smoking and sex between dawn and sunset.
Starting this year in late July, the holy month of Ramadan is a time when consumption of cooking oil usually climbs as followers break daylong fasts with communal meals.
Seeing a decline in exports over the past few months, due to the debt crisis in Europe and the slowing economy in China, Ramadan is awaited to boost oil exports in Indonesia.
In a survey by Bloomberg News, five plantation and refining company executives expected a climb in exports to 1.5 million tons from 1.37 million tons in May.
Inventory will also be little changed at 1.85 million tons, two of the respondents said.
Muslims dedicate their time during the holy month to be closer to Allah through prayers, self-restraint and good deeds.
It is customary for Muslims to spend part of the days during Ramadan studying the Noble Qur'an.
Many men perform i`tikaf (spiritual retreat), spending the last 10 days of the month exclusively in the mosque.
Indonesian companies were not worried about the current decline in food industry, building hopes of looming increase in exports.
The food industry is still the main market for palm oil, so I'm not too worried about any potential decline in demand, said Sahat Sinaga, executive director of the Indonesian Confederation of Vegetable Oil Industries.
As long as people still need cooking oil and they still like to use palm oil as the main ingredient, demand will never run out.
The country's export-tax structure is making its products more attractive compared with Malaysia, the second-largest producer, Sinaga said.
He expects refined-palm oil exports will represent 51 percent of total shipments this year, up from 40 percent last year.
Indonesia cut the tax rate for exports of crude palm oil in July to 15 percent, a level last seen in January, from 19.5 percent this month, said Deddy Saleh, director general of foreign trade at the Ministry of Trade.
The government reviews the tax rates and base export prices every month, based on average rates in Kuala Lumpur, Rotterdam and Jakarta.
Indonesia has been self-sufficient in rice since 2008 and is already the top producer of palm oil.
The country is the world's most populous Muslim state with Muslims making up around 85 percent of its 220-million population.