Palm Oil Price Slips Below 4,500 Ringgit Amid Indonesia’s B50 Push

Palm oil futures slipped below 4,500 ringgit per ton on Tuesday, extending losses for a third session as a stronger ringgit and rising inventories weighed on sentiment, even as Indonesia’s push toward higher biodiesel blending promised stronger demand ahead.

Benchmark palm oil settled at 4,451 ringgit ($937) per ton, down 0.2 percent from Monday, according to Trading Economics data. Prices have risen just 0.14 percent over the past month and are up 3.2 percent from a year earlier. Malaysia’s government expects crude palm oil prices to average 3,900–4,100 ringgit per ton in 2026, citing higher global supply and stronger output from rival vegetable oils.

Industry data showed end-September palm oil inventories rose 7.2 percent from August to 2.36 million tonnes, the highest in nearly two years, while Indian imports, the world’s largest market, may drop below 600,000 tonnes in October following a 16 percent fall in September. The decline was cushioned by firm export data, with Malaysian shipments up between 9.9 percent and 19.4 percent in the first ten days of October, according to cargo surveyors.

Meanwhile, Indonesia, the world’s top palm oil producer, is pressing ahead with plans to launch its B50 biodiesel program in 2026, which will use a 50 percent blend of crude palm oil (CPO). Energy Minister Bahlil Lahadalia said the program could create up to 2.5 million new jobs, mainly in plantations and processing facilities, while reducing diesel imports and strengthening local economies.

“To meet increased CPO demand, we will intensify existing plantations, open new ones, and manage export reductions through a domestic market obligation policy,” Bahlil said. “Prices must benefit the country and stimulate regional economies.”

Indonesia’s current B40 mandate still leaves the country importing about 4.9 million kiloliters of diesel, roughly 10.6 percent of total demand. Moving to B50 could allow Indonesia to meet its fuel needs entirely from local sources, potentially eliminating diesel imports by 2026.

Road tests for B50 are now underway and expected to take six to eight months. If successful, Indonesia could roll out the program next year. The government estimates that biodiesel use has already saved $40.7 billion in foreign exchange since 2020, and the B50 program alone could save another $10.8 billion in 2026.

Tags: demand, inventories, export, Indonesia, biodiesel, palm oil, futures