Indonesia's CPO Production Projected to Drop by 9 Percent

Jakarta. Due to fears of reduced rainfall caused by the El Niño weather phenomenon, Indonesia's crude palm oil (CPO) production is expected to witness a sharp decline of approximately 9 percent next year. El Niño is also likely to impact CPO production in Malaysia. It is worth noting that Indonesia and Malaysia are the world's two leading producers and exporters of palm oil. Thailand's palm oil production could also be affected.

The Managing Director of a leading commodity consultancy firm states that Indonesia's CPO production in 2027 could fall by about 9 percent compared to 2026, dropping to 46.9 million tonnes. If the drought conditions caused by El Niño persist for an extended period, palm oil production across Southeast Asia could see a significant decline.

According to analysts, the current impact of El Niño in these regions is not as severe or widespread as the impact observed in 2015. However, the situation could change if monsoon conditions prove unfavorable next year. Both countries experienced dry weather in September 2026, and there are doubts regarding sufficient rainfall in October as well. Weather experts anticipate good rainfall in November.

Concerns regarding a reduction in exportable stocks already exist due to the massive use of palm oil in biodiesel production in Indonesia. In such a scenario, a sharp drop in production could further weaken palm oil export performance, potentially compounding difficulties for top importing nations like India and China.