Rising demand for biodiesel curbs Colombia’s palm oil exports

Colombian palm oil exports are expected to fall to 420,000 tonnes in 2024/25 due to growing domestic demand for biodiesel, according to a report from the U.S. Department of Agriculture (USDA).

A March report from the USDA’s Foreign Agricultural Service (FAS) said palm oil exports from the world’s fourth-largest producer, which produces nearly 2 million tonnes a year, fell in the first quarter despite increases in both planted area and production.

Colombia’s biodiesel blending rate has been steadily increasing since 2015 and is estimated to reach 12.5% ​​in 2024. The higher blending is supported by voluntary programs allowing up to 20% biodiesel in truckloads.

The report said that the share of exports in total production fell from 40% previously to just over 20% in 2023/24, with supply directions changing.

Colombia’s share expanded in the Mexican market, likely due to lower imports of rapeseed oil from Canada. It declined in the European Union (EU) markets, including due to lower palm oil consumption.

The report also said that palm oil exports from Thailand had stabilized after a decade of growth. Thailand is the third-largest palm oil producer after Indonesia and Malaysia, accounting for 5% of global output.

According to the US Department of Agriculture, Thailand has increased its palm oil production by 80% over the past decade by expanding its planting area, while exports of the tropical product have grown twentyfold to reach 800,000 tonnes.

Thailand’s palm oil exports as a percentage of production have increased to an average of 22% over the past five years, up from 8% in 2016–20.

Most of Thailand’s palm oil export growth has been driven by increased demand from India, which has accounted for 80% of shipments since 2017.

“Palm oil price competitiveness for exports to India will be a key driver of Thailand’s palm oil export potential through 2025 as India seeks lower-cost alternatives,” the USDA said.

Tags: palm oil, Colombia