Indonesia to cut palm oil exports: ‘Palm oil is no longer a cheap vegetable oil’ – expert

Indonesia is expected to export 27.5 million tonnes of palm oil in 2025, down 6.9% from last year, the largest palm oil group, the Indonesia Palm Oil Association (GAPKI), said on Thursday.

The world’s largest exporter of the commodity is struggling to ramp up production of the versatile vegetable oil as its trees age, while it expands mandatory palm oil additives in biodiesel.

The decline will continue at an 8.3% rate in 2024, when Indonesia exported 29.54 million tonnes of palm oil products, according to GAPKI.

A modest increase in Indonesia’s output in 2025, coupled with rising domestic demand, is expected to dampen export prospects, association spokesman Hadi Sugeng told reporters.

“Exports tend to fall year on year, unlike domestic consumption,” Hadi added. “At the same time, our production is so-so.”

GAPKI estimates that total palm oil production this year will be 53.63 million tonnes, including about 48.98 million tonnes of crude palm oil, only slightly up from last year.

Indonesia is expected to produce 48.16 million tonnes of crude palm oil in 2024, and its reserves will be 2.58 million tonnes by the end of 2024, according to GAPKI.

The limited exports have pushed up palm oil prices on global markets, which GAPKI warns could reduce competitiveness against rival vegetable oils.

“Palm oil is no longer a cheap vegetable oil,” Hadi added. “It is often more expensive than other vegetable oils, forcing importers, especially Indian ones, to buy cheaper ones.”

Tags: Indonesia, palm oil