USDA lowers Indonesia’s 2024/25 palm oil export estimate due to B40 mandate and reduced export demand
The US Department of Agriculture (USDA) has lowered its forecast for Indonesian palm oil exports in 2024/25 from its previous estimate to 22.8M tonnes due to the B40 mandate and reduced export demand.
Indonesia’s palm oil production 2025/26 estimate was maintained at 47M tonnes, up 3% from 45.5M tonnes the previous year, due to expectations of improved yields following favourable weather and adequate fertiliser application, the 6 August Foreign Agricultural Service (FAS) Indonesia: Oilseeds and Products Update report said.
Indonesia’s biodiesel industry had boosted domestic palm oil consumption over the past decade, the report said.
In early 2025, the biodiesel mandate increased from 35% to 40% biodiesel content (B40), with an annual allocation of 15.6bn litres.
By May 2025, biodiesel distribution for the increased blending mandate programme came online, reaching 5.85bn litres, or 38% of the annual total.
The USDA maintained its estimates for palm oil industrial use at 14.7M tonnes and 14.9M tonnes for 2024/25 and 2025/26 respectively.
The estimate for palm oil use in the food sector remained unchanged at 7.4M tonnes for 2025/26, a 1% increase from 2024/25 due to ongoing demand mainly from the cooking oil industry.
On the assumption of no changes to the blending mandate programme, palm oil consumption was expected to reach 22.4M tonnes for 2024/25, rising by 1% to 22.6M in 2025/26.
The USDA maintained its Indonesian palm oil exports forecast at 24M tonnes for 2025/26, a 5% increase from its revised 2024/25 estimate of 22.8M tonnes, which had previously been lowered from the previous estimate due to lower exportable volume and reduced demands from key markets.
Palm oil shipments from October 2024 to May 2025 totalled 14M tonnes, 3% lower than the corresponding period the previous year.
Over the same period, palm oil prices rose 24% year-on-year, faster than other vegetable oils such as soyabean oil which increased by 7%.
Higher shipments to Pakistan and Bangladesh were unable to offset decreasing demand from China, India and the USA.
“A narrowing price spread with other competing vegetables oils pushed buyers to switch to non-palm oil,” the USDA said.
Shipments to the USA also decreased by 32% due to higher prices and tariff-related uncertainty but were expected to rebound after the palm oil price started to stabilise in May 2025.
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