Indonesia, the world's largest palm oil producer, prioritises the commodity's use in its domestic biodiesel sector. This strategic shift is set to reshape global palm oil dynamics.
Palm oil production in Indonesia is expected to increase in 2024. However, the country's biodiesel programs now absorb a significant and growing proportion of this production. Industry experts estimate that approximately 22% of Indonesian palm oil output is currently used for energy purposes.
The increased domestic demand for biodiesel has consequently reduced the volume of palm oil available for export markets. The Indonesian Palm Oil Association (Gapki) forecasts softer palm oil prices in the second half of 2024 compared to the first half. However, average prices for the year are still expected to exceed those seen in the previous year.
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