Indonesia Palm Oil Output Seen Recovering in 2025, but Biodiesel

Indonesia prepares to carry out B40 in January

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

B40 will need extra 3 mln loads feedstock, GAPKI states

Malaysia palm oil criteria at greatest given that mid-2022

India might withdraw import tax hike amid inflation, Mistry states

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

By Bernadette Christina

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

The palm oil standard rate in Malaysia has actually increased more than 35% this year, lifted by sluggish output and Indonesia’s strategy to increase the mandatory domestic biodiesel mix to 40% in January from 35% now in an effort to minimize fuel imports.

Palm oil output next year in top producer Indonesia is expected to recuperate by 1.5 million metric tons compared with an approximated drop of simply over a million tons this year, Julian McGill, managing director at Glenauk Economics, informed the Indonesia Palm Oil Conference on Friday.

Thomas Mielke, head of Hamburg-based research firm Oil World, stated he expects 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 elsewhere and of other vegetable oils is seen tightening.

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

‘FRIGHTENING’ PRICE SURGE

The rate rise in palm oil in the past 7 weeks has been “frightening” for buyers, Mielke said, 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 extra feedstock of around 3 million heaps will be needed for B40 execution, wearing down export supply.

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

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

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

“Sentiment right now is red-hot and very bullish, we have to beware,” said Dorab Mistry, director at Indian durable goods business Godrej International.

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

Mielke and Mistry advised Indonesia to

think about delaying

B40 implementation on concern about its effect on food consumers.

Meanwhile, Mistry expected leading palm 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)