Indonesia's palm oil exports are projected to fall in 2024 due to increased domestic consumption driven by higher biodiesel blending mandates and a slight dip in production. The exports may drop by 2 million metric tons compared to the previous year, according to an industry official.
Indonesia's palm oil exports are set to decline in 2024, largely due to increased domestic consumption driven by higher biodiesel blending mandates and a small decrease in production, an industry official told Reuters.
As the world's largest producer of palm oil, Indonesia's anticipated lower output will likely limit exports, thereby supporting benchmark Malaysian prices. According to Fadhil Hasan, head of the trade and promotion division at the Indonesian Palm Oil Association, the country's exports could fall by 2 million metric tons to 30.2 million tons in 2024. This announcement came during the Globoil conference.
In the first half of this year, exports fell 7.6% to 15.06 million tons compared to the same period last year. Hasan highlighted that production is expected to decrease by 1 million tons to 53.8 million tons due to adverse weather conditions affecting yields.
"There has been neither an improvement in productivity this year nor an expansion in area. We anticipate that this year will result in a reduction of production by 1 million tons," Hasan stated. He added that Indonesia increased the share of palm oil blended into biodiesel to 35% in 2023, implementing it nationwide from August 1.
This change is anticipated to boost palm oil consumption to a record 24.2 million tons in 2024, up from 23.2 million tons last year. Indonesia's energy ministry also indicated plans to raise the biodiesel blend to 40% in January 2025 to reduce fuel imports and emissions from fossil fuels.
The rise in domestic consumption is expected to reduce the surplus available for exports, which in turn helps to fund Jakarta's biodiesel program. Hasan emphasized the need for the government to carefully consider production and export trends before further increasing the blending mandate, as export revenues are crucial to supporting the biodiesel initiative.
