News Capsule: Indonesia – Palm Oil Update
12-Jan-2026 10:08 AM
News Capsule: Indonesia – Palm Oil Update
★ Indonesia’s plan to raise the export levy on palm oil is expected to provide mild support to global prices and increase India’s import costs, though the upside in prices is likely to remain limited. With ample global inventories, the impact is expected to be felt more on prices than on supply.
★ Indonesia is considering increasing the palm oil export levy from the current 10% to around 15–20%. The move is aimed at funding the country’s biodiesel programme. Indonesia has already mandated B40 (40% biodiesel blending) and is targeting B50 in the future. The levy hike is likely to be implemented from March or later.
★ A higher levy would raise the landed cost of Indonesian palm oil, encouraging buyers to explore alternative sources such as Malaysia. However, large importers like India cannot fully replace Indonesian supplies with Malaysian origin due to long-term contracts and limited availability.
★ India’s dependence on Indonesia remains significant. In the 2024–25 edible oil year, India imported about 3.58 million tonnes of palm oil from Indonesia, compared with around 2.8 million tonnes from Malaysia. Even so, a price difference of $20–50 per tonne can influence short-term sourcing decisions.
★ An increase in the export levy would divert more palm oil towards biodiesel production, potentially removing around 1.5 million tonnes from the export market. In the near term, however, supply is expected to remain comfortable, with inventories adequate during the January–March period.