Opportunities for soybean crushing in Indonesia

November 9, 2018

Indonesia is Southeast Asia’s second-largest soymeal consumer, but it has no crushing industry. According to Rabobank, this is partly because it is one of the smallest soy oil consumers, due to the abundance of cheaper palm oil. This limits a crusher’s revenue from selling soy oil domestically and requires domestic crushers to move soy oil largely into the export market. “Investments in soybean crushing facilities in Indonesia could generate positive margins and could be economically feasible if the produced soy oil is exported,” said Oscar Tjakra, Senior Analyst – Grains & Oilseeds at the agriculture bank. “South Asian countries are suitable export destinations due to their strong soy-oil import demand growth and their proximity to Indonesia.” The strength of the rupiah will also play an important role in crusher margins, as soybean needs to be imported for processing. Similarly, the rupiah will also determine the competitiveness of Indonesian soy oil exports to South Asia, compared to South America, Mr Tjakra explained.