Indonesia Palm Oil Output Seen Recovering in 2025, but Biodiesel

Indonesia prepares to implement B40 in January

In that case, costs might rally 10%-15% in Jan-March, Mielke states

B40 will need extra 3 mln heaps feedstock, GAPKI states

Malaysia palm oil benchmark at greatest considering that mid-2022

India might withdraw import tax hike amid inflation, Mistry says

(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 elevated due to planned growth of the country’s biodiesel mandate, market analysts said.

The palm oil standard price in Malaysia has risen more than 35% this year, raised by slow output and Indonesia’s strategy to increase the compulsory domestic biodiesel mix to 40% in January from 35% now in an effort to lower fuel imports.

Palm oil output next year in leading producer Indonesia is expected to recover by 1.5 million metric heaps compared with an estimated drop of just over a million tons this year, Julian McGill, handling director at Glenauk Economics, told the Indonesia Palm Oil Conference on Friday.

Thomas Mielke, head of Hamburg-based research company Oil World, said 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 enhance, supply from in other places and of other veggie oils is seen tightening.

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

“We would require 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 rate surge in palm oil in the past 7 weeks has actually 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 said additional feedstock of around 3 million lots will be required for B40 execution, wearing down export supply.

The present palm oil premium has actually already caused 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 lot in 2025, McGill of Glenauk approximated.

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

“Sentiment today is red-hot and extremely bullish, we have to be mindful,” said 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 urged Indonesia to

consider delaying

B40 application on issue about its effect on food customers.

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

hike

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)