Indonesia Palm Oil Output Seen Recovering in 2025, but Biodiesel

Indonesia prepares to execute B40 in January

Because case, costs may rally 10%-15% in Jan-March, Mielke says

B40 will need extra 3 mln lots feedstock, GAPKI says

Malaysia palm oil standard at highest considering that mid-2022

India may withdraw import tax hike amid inflation, Mistry states

(Adds expert remarks, updates Malaysia’s palm oil benchmark cost)

By Bernadette Christina

NUSA DUA, Indonesia, Nov 8 (Reuters) – Indonesia’s palm oil output is anticipated to recuperate in 2025 after an expected drop this year, but costs are expected to stay raised due to organized expansion of the nation’s biodiesel mandate, market analysts stated.

The palm oil criteria price in has risen more than 35% this year, lifted by sluggish output and Indonesia’s plan to increase the obligatory domestic biodiesel mix to 40% in January from 35% now in an effort to minimize fuel imports.

Palm oil output next year in leading producer Indonesia is anticipated to recover by 1.5 million metric heaps compared to a projected drop of just over a million lots this year, Julian McGill, managing director at Glenauk Economics, told the Indonesia Palm Oil Conference on Friday.

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

While Indonesia’s output is forecast to improve, provide from elsewhere and of other veggie oils is seen tightening up.

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

“We would need a recovery in palm in 2025 due to the fact that combined exports of soya, sunflower and rapeseed oils are declining,” Mielke said.

‘FRIGHTENING’ PRICE SURGE

The cost surge in palm oil in the previous seven weeks has been “frightening” for purchasers, Mielke said, adding that it would rally by 10%-15% in January-March if Indonesia implements the so-called B40 policy.

The Indonesia Palm Oil Association stated extra feedstock of around 3 million heaps will be required for B40 execution, deteriorating export supply.

The existing palm oil premium has currently caused palm to lose market share versus other oils, Mielke added.

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

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

“Sentiment today is red-hot and very bullish, we need to take care,” said Dorab Mistry, director at Indian durable goods company Godrej International.

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

Mielke and Mistry advised Indonesia to

think about delaying

B40 execution on issue about its influence on food customers.

Meanwhile, Mistry anticipated 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)