Indonesia Palm Oil Output Seen Recovering in 2025, but Biodiesel

Indonesia prepares to implement B40 in January

Because case, rates might rally 10%-15% in Jan-March, Mielke says

B40 will require additional 3 mln loads feedstock, GAPKI states

Malaysia palm oil criteria at greatest because mid-2022

India may withdraw import in the middle of inflation, Mistry says

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

By Bernadette Christina

NUSA DUA, Indonesia, Nov 8 (Reuters) – Indonesia’s palm oil output is anticipated to recover in 2025 after an expected drop this year, however costs are anticipated to remain elevated due to scheduled expansion of the nation’s biodiesel required, market experts stated.

The palm oil benchmark rate in Malaysia has increased more than 35% this year, raised by sluggish output and Indonesia’s plan to increase the mandatory domestic biodiesel blend to 40% in January from 35% now in an effort to lower fuel imports.

Palm oil output next year in leading manufacturer Indonesia is expected to recuperate by 1.5 million metric heaps compared to an estimated drop of just over a million loads this year, Julian McGill, managing director at Glenauk Economics, told 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 lots next year after a 2.5 million heap drop in 2024.

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

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

“We would need a recovery in palm in 2025 because combined exports of soya, sunflower and rapeseed oils are declining,” Mielke stated.

‘FRIGHTENING’ PRICE SURGE

The cost rise in palm oil in the past seven weeks has actually 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 additional feedstock of around 3 million loads will be needed for B40 execution, eroding export supply.

The present palm oil premium has already 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 heap in 2025, McGill of Glenauk approximated.

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

“Sentiment right now is red-hot and incredibly bullish, we need to be mindful,” stated Dorab Mistry, director at Indian durable goods company Godrej International.

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

Mielke and Mistry advised Indonesia to

consider postponing

B40 implementation on concern about its influence on food customers.

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

import responsibility 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)