Indonesia Palm Oil Output Seen Recovering in 2025, but Biodiesel

Indonesia plans to execute B40 in January

In that case, rates may rally 10%-15% in Jan-March, Mielke says

B40 will need additional 3 mln heaps feedstock, GAPKI says

Malaysia palm oil benchmark at highest considering that mid-2022

India may withdraw import tax trek amid inflation, Mistry states

(Adds expert comments, updates Malaysia’s palm oil standard cost)

By Bernadette Christina

NUSA DUA, Indonesia, Nov 8 (Reuters) – Indonesia’s palm oil output is forecast to recuperate in 2025 after an anticipated drop this year, however costs are anticipated to remain elevated due to organized growth of the nation’s biodiesel mandate, industry analysts said.

The palm oil standard cost in Malaysia has actually increased more than 35% this year, lifted by sluggish output and Indonesia’s strategy to increase the obligatory domestic biodiesel blend to 40% in January from 35% now in an effort to minimize fuel imports.

Palm oil output next year in top manufacturer Indonesia is expected to recuperate by 1.5 million metric lots compared with an estimated drop of just over a million tons this year, Julian McGill, managing director at Glenauk Economics, informed the Indonesia Palm Oil Conference on Friday.

Thomas Mielke, head of Hamburg-based research company Oil World, stated he anticipates Indonesia’s palm oil production to increase by as much as 2 million tons next year after a 2.5 million lot drop in 2024.

While Indonesia’s output is anticipated to enhance, supply from elsewhere and of other vegetable oils is seen tightening.

Palm oil output in neighbouring Malaysia is expected to dip a little next year after increasing by an approximated 1 million loads in 2024.

“We would require a healing in palm in 2025 since combined exports of soya, sunflower and rapeseed oils are declining,” Mielke said.

‘FRIGHTENING’ PRICE SURGE

The cost rise in palm oil in the past seven weeks has been “frightening” for purchasers, Mielke stated, including that it would rally by 10%-15% in January-March if Indonesia enforces the so-called B40 policy.

The Indonesia Palm Oil Association stated of around 3 million heaps will be needed for B40 application, eroding export supply.

The current palm oil premium has actually already triggered palm to lose market share against other oils, Mielke added.

Malaysian palm oil costs are seen trading at around $950 to $1,050 per metric heap in 2025, McGill of Glenauk approximated.

Benchmark Malaysian palm oil touched 5,104 ringgit ($1,165.30) on Friday, the greatest given that mid-2022.

“Sentiment today is red-hot and extremely bullish, we have to be cautious,” stated Dorab Mistry, director at Indian consumer goods business Godrej International.

He anticipated the Malaysian price around 5,000 ringgit and above until June 2025.

Mielke and Mistry prompted Indonesia to

consider postponing

B40 application on issue about its impact on food consumers.

Meanwhile, Mistry expected leading palm oil importer India to withdraw its

import duty walking

enforced from September after elections in the state of Maharashtra in November. ($1 = 4.3800 ringgit) (Reporting by Bernadette Christina Munthe Writing by Fransiska Nangoy; Editing by John Mair, Jane Merriman and Daren Butler)