Fresh fruit bunches of oil palm are seen on a lorry to be sent to a mill at a the palm oil collection center for smallholders in Banting, Selangor, Malaysia. (Reuters Photo)

By Rajendra Jadhav

MUMBAI- Indonesia’s palm oil exports are expected to decline in 2024 due to increased domestic consumption because of a higher biodiesel blending mandate and a slight decrease in production, an industry official told Reuters on Thursday.

Lower output in the world’s biggest producer of the tropical oil would limit exports and support benchmark Malaysian prices

The country’s exports could fall by 2 million metric tons from a year ago to 30.2 million tons in 2024, Fadhil Hasan, head of the trade and promotion division at the Indonesian Palm Oil Association said on the sidelines of the Globoil conference.

In the first half of the year, exports fell 7.6 percent  from a year ago to 15.06 million tons, he said.

Production is likely to drop by 1 million tons to 53.8 million tons as last year’s dry weather is lowering yields, he said.

“There has been neither an improvement in productivity this year nor an expansion in area. We anticipate that this year will result in a reduction of production by 1 million tons,” Hasan said.

Indonesia increased the share of palm oil blended into biodiesel to 35 percent  in 2023 and implemented it nationwide from Aug. 1, 2023.

This would lift palm oil consumption to a record 24.2 million tons in 2024 from 23.2 million tons last year, he said.

The country’s energy ministry said last month it plans to raise the blending to 40 percent  in January 2025, in an effort to reduce fuel imports and emissions from fossil fuels. – Reuters