Belgian agribusiness group SIPEF, which operates oil palm plantations in Indonesia, Papua New Guinea and the Ivory Coast, has announced optimistic results in its interim statement published on 30 September despite the ongoing effects of the COVID-19 pandemic.

“So far, COVID-19 has not had a significant direct negative financial impact on the operational activities of the SIPEF group,” the statement said.

“All production units have remained operational, with no loss of volumes or yield per hectare. The negative effects on the world market for commodities for the group have mainly been limited to a previously reported sudden drop in the price of palm oil, with a low point in May.”

In the first nine months of 2020, the group’s palm oil production grew by 5% compared to the first nine months of last year, and this growth was expected to continue in the fourth quarter.

Favourable weather conditions on its Indonesian estates in the third quarter had mitigated the expected negative impact of the drought of mid-2019, the company said.

Demand for palm oil, for both food and biodiesel applications, had remained strong and, to date, the Schoten-headquartered group had sold 94% of its expected palm oil production for 2020.

The third quarter had been dominated by good palm oil exports, with consuming countries replenishing stocks following the COVID-19 lockdowns.

Malaysian palm oil production had peaked in June, the report said, staying relatively flat during the third quarter.

China had remained a strong buyer of palm oil but also of all agricultural commodities as it restocked following lockdown. India had also been a big importer, the company said, but demand had been more intermittent.

Demand had been strong from most importing countries generally, the statement said.

In addition, Indonesian domestic consumption had remained strong and biodiesel volumes to fulfil the B30 blending programme had remained steady.

Based on these sales and recent market conditions, SIPEF said it expected a return to profit by the end of the year.

The palm oil market had a solid supply and demand outlook, the company said, with the second wave of COVID-19 and the financing of the B30 biodiesel mandate in Indonesia being the two main factors for the palm oil market.

The company said its expansion in South Sumatra, Indonesia, had continued steadily with an increase in total cultivated area in Musi Rawas from 1,340ha to 13,543ha by the end of September 2020. A further 4,210ha had been replanted in the nearby Dendymarker plantation.

SIPEF is involved in the production of oil palm products, including fresh fruit bunches, crude palm oil, palm kernels, crude palm kernel oil, as well as natural rubber, tea, bananas, flowers and foliage. Its subsidiaries operate in Indonesia, Papua New Guinea and Ivory Coast.