Indonesia: palm oil exports to fall in 2024 on rising demand, lower output

Indonesia’s palm oil exports are expected to decline in 2024 due to increased domestic consumption because of a higher biodiesel blending mandate and a slight decrease in production, an industry official told on Thursday. Lower output in the world’s biggest producer of the tropical oil would limit exports and support benchmark Malaysian prices. The country’s exports could fall by 2 million tonnes from a year ago to 30.2 million tonnes in 2024, Fadhil Hasan, head of the trade and promotion division at the Indonesian Palm Oil Association, said on the sidelines of the Globoil conference. In the first half of the year, exports fell 7.6 percent from a year ago to 15.06 million tonnes, he said. Production is likely to drop by 1 million tonnes to 53.8 million tonnes as last year’s dry weather is lowering yields, he said.

“There has been neither an improvement in productivity this year nor an expansion in area. We anticipate that this year will result in a reduction of production by 1 million tonnes,” Hasan said.

Indonesia increased the share of palm oil blended into biodiesel to 35 percent in 2023 and implemented it nationwide from Aug. 1, 2023. This would lift palm oil consumption to a record 24.2 million tonnes in 2024 from 23.2 million tonnes last year, he said. The Energy and Mineral Resources Ministry said last month it plans to raise the blending to 40 percent in January 2025 in an effort to reduce fuel imports and emissions from fossil fuels.

The rising consumption is set to reduce surplus for exports, which helps Jakarta raise funds to implement its biodiesel program, Hasan said. “The government should carefully consider trends in production and exports before increasing the blending mandate. Exports generate revenue that supports the biodiesel program,” he said.

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Tags: exports, Indonesia, prices, Production, biodiesel, palm oil, output, consumption