Thursday, October 30, 2008

Oil Palm Mill in Riau Province will stop the production


As much as 132 of palm oil mills (PKS) in Riau Province plan to stop the raw palm oil (Crude Palm Oil/CPO) production because the storage tank is full. Discontinuance also as a result of the inquiry weakness of CPO in commodities market.

Total capacity of CPO storage tank in Dumai is 220,000 metric tons and now filled more than 80% because it has not been sold yet. Many buyer especially from China and India have postpone the export causes of  the CPO price in the world commodity market continues to slump.

Head of Representative Office PT Sumber Sari Sejahtera Makmur, said their palm oil mills (capacity 4,000 tons) which located in Indragiri Hulu regency have excess the production capacity and has resulted has begun full. Actually, every day, the factory can process 800 tons of fresh fruit bunches (TBS), which can produce about 175 tons of CPO per day.

The current conditions have been more gravely. Previously all the CPO production is always sold out each day. If this condition still ongoing -  tank is full and without any buyers - estimated one week longer factory will stop production. The palm oil mills has to continue to produced during the abundant stock of CPO and they intended to temporarily stop buying oil palm plantation from farmers. This must be done to minimize losses due to the company's CPO prices continue to fall, while the stock is manufactured using long before the decline in prices has not yet been sold.

During the last three weeks there is no CPO export shipments from Dumai port because there are no buyers. China's buyer has to rescheduling the CPO agreements contract and India's buyer has to underwritten through restructuring, the number of purchase contracts.