Indonesia’s palm oil production to grow by 3% in MY 2026/27

Palm oil production in Indonesia in MY 2026/27, according to the forecast of the United States Department of Agriculture (USDA), will grow by 3% and reach 48 million tons against 46.7 million tons a year earlier. The main drivers of growth are plantations laid in 2021-2024, which are entering the phase of active fruiting, as well as the wider use of high-yielding varieties.

At the same time, experts note that the expansion of new plantations in 2025 remained limited. Production growth is primarily ensured by the intensification of existing areas, while the share of young plantations that have not yet yielded a harvest continues to increase.

According to the report, over the past five years, the area of ​​young plantations has increased by more than 60%, while the annual expansion of new plantations does not exceed 150 thousand hectares. This indicates a slowdown in the territorial expansion of the industry and a shift to an intensive development model.

An additional factor that may affect yields is climate risks. The Indonesian Meteorological Agency (BMKG) predicts an early start to the dry season in 2026 with below-normal rainfall, increasing the risks of drought and heat stress for palms.

Also, government measures to confiscate illegal plantations in 2025 may have a long-term impact on production through the loss of some agricultural resources and reduced access to fertilizers. If these trends continue, they may limit production in the MY 2026/27.

Despite this, fertilizer use on private plantations remains stable, supporting yield potential. Meanwhile, domestic palm oil consumption is forecast to grow by 2% to 23.1 million tonnes, mainly driven by industrial demand and the development of the biodiesel segment.

Palm oil exports from Indonesia in MY 2026/27 are expected to be 25 million tonnes (+4%), while stocks will decline to 4.3 million tonnes due to growing domestic demand and increased supplies to external markets, in particular to China, India and Pakistan.

Tags: Indonesia, palm oil, crop forecast