Indonesia Palm Oil Output Seen Recovering in 2025, However Biodiesel

Indonesia plans to implement B40 in January

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

B40 will need extra 3 mln loads feedstock, GAPKI says

Malaysia palm oil criteria at greatest since mid-2022

India might withdraw import tax trek amidst inflation, Mistry says

(Adds analyst comments, updates Malaysia’s palm oil benchmark cost)

By Bernadette Christina

NUSA DUA, Indonesia, Nov 8 (Reuters) palm oil output is forecast to recuperate in 2025 after an expected drop this year, but costs are expected to remain raised due to planned expansion of the nation’s biodiesel required, industry experts stated.

The palm oil benchmark cost in Malaysia has increased more than 35% this year, raised by slow output and Indonesia’s strategy to increase the necessary domestic biodiesel mix to 40% in January from 35% now in an effort to reduce fuel imports.

Palm oil output next year in leading producer Indonesia is anticipated to recover by 1.5 million metric heaps compared with 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, said he expects Indonesia’s palm oil production to increase by as much as 2 million loads next year after a 2.5 million ton drop in 2024.

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

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

“We would require a recovery in palm in 2025 because combined exports of soya, sunflower and rapeseed oils are decreasing,” Mielke said.

‘FRIGHTENING’ PRICE SURGE

The cost rise in palm oil in the past seven weeks has actually been “frightening” for purchasers, Mielke stated, including that it would rally by 10%-15% in January-March if Indonesia implements the so-called B40 policy.

The Indonesia Palm Oil Association stated extra feedstock of around 3 million heaps will be required for B40 application, wearing down export supply.

The current palm oil premium has actually already triggered palm to lose market share against other oils, Mielke included.

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

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

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

He anticipated the Malaysian cost around 5,000 ringgit and above till June 2025.

Mielke and Mistry urged Indonesia to

think about postponing

B40 implementation on issue about its effect on food consumers.

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

import task hike

imposed 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)