• Indonesia may restrict palm oil exports to boost biodiesel
• B50 mandate could add 5.3M tons in domestic demand
• Analysts warn of tighter supply, rising global CPO prices

Indonesia may regulate crude palm oil (CPO) exports as part of efforts to achieve biodiesel self-sufficiency, Energy Minister Bahlil Lahadalia said on Tuesday, October 14.

The world’s top palm oil producer, Indonesia, has run a palm oil-diesel blend program for more than a decade and plans to introduce its B50 biodiesel mandate in the second half of 2026. The measure would raise the palm oil blend to 50% from the current 40% (B40) and could add 5.3 million tons of domestic demand.

Lahadalia said the government could expand output through new plantations or enforce the Domestic Market Obligation (DMO), which requires exporters to supply a portion of their output domestically before export approval.

The DMO was previously applied under former President Joko Widodo in 2022 to stabilize cooking oil prices, requiring exporters to sell 20% of shipments locally. The announcement has raised concerns among analysts about tighter global palm oil supplies and possible price increases.

Bloomberg quoted trader Dorab Mistry as saying at a conference in Colombia last September that palm oil prices could exceed 5,000 ringgit ($1,191), and possibly reach 5,500 ringgit per ton, on the Bursa Malaysia Derivatives Exchange by year-end, driven by the B50 policy and continued government takeovers of palm oil concessions.

In 2024, benchmark CPO prices rose 20%, closing the year at around 4,861 ringgit per ton.

Espoir Olodo