Lang
Indonesian Energy Minister Bahlil Lahadalia said on Tuesday, 14 October, that Indonesia may regulate crude palm oil (CPO) exports as part of efforts to achieve self-sufficiency in biodiesel fuel.
Indonesia, the world's largest palm oil producer, has run a palm oil-diesel blending programme for more than a decade and plans to implement its B50 biodiesel programme in the second half of 2026. The move would raise the palm oil blend ratio to 50% from the current 40% (B40), potentially adding 5.3 million tonnes to domestic demand.
Lahadalia said the government could boost production either through new plantations or by imposing a Domestic Market Obligation (DMO), which requires exporters to supply a portion of their output domestically before receiving export approval.
The Domestic Market Obligation was previously applied under former President Joko Widodo in 2022 to stabilise cooking oil prices, requiring exporters to sell 20% of their shipments domestically. The latest announcement has stoked concerns among analysts over tighter global palm oil supplies and the potential for higher prices.
Bloomberg quoted trader Dorab Mistry as saying at a conference in Colombia in September that palm oil prices could exceed 5,000 ringgit ($1,191) and possibly reach 5,500 ringgit per tonne on Bursa Malaysia Derivatives by the end of the year, driven by the B50 policy and the government's continued takeover of palm oil concessions.
In 2024, benchmark crude palm oil prices rose 20%, closing the year at around 4,861 ringgit per tonne.