Chinese buyers increase purchases of Indonesian palm oil

Chinese importers have significantly increased purchases of Indonesian palm oil following the Indonesian government’s announcement of a new centralized export system for key commodities. Buyers are seeking to take advantage of lower prices before the new regulations are fully implemented.

The surge in demand was triggered by Indonesian President Prabowo Subianto’s announcement on May 20 to centralize exports of strategic commodities in an effort to boost state revenues and strengthen control over the country’s natural resources. Although exporters have been required to report sales since June 1, a transition period will remain in place until January 1, 2027.

According to market sources, at least 18 and possibly as many as 30 cargoes of palm olein were booked within two weeks of the policy announcement, with most shipments scheduled for June and July. These volumes are well above China’s typical monthly imports of around 17–18 cargoes of Indonesian palm oil.

Strong buying activity has been supported by attractive price margins after palm olein futures rallied on China’s Dalian Commodity Exchange. At the same time, Indonesian producers have been eager to sell cargoes before the country’s new export framework takes full effect.

Demand is also rising in India, the world’s largest vegetable oil importer, where buyers have been securing discounted Indonesian supplies. While the policy change is expected to support Indonesian exports in the short term, traders remain cautious about its longer-term impact, as the new system could eventually lead to higher prices and lower export volumes.

Tags: China, Indonesia, palm oil