Indonesia: Full-year biodiesel feedstock demand is expected to reach around 15 million tons

Indonesia’s palm oil market is entering a structural shift driven by domestic energy policy. The Indonesian Palm Oil Association projects exports to decline to around 30 million tons in 2026, down from 32 million tons in 2025. The key driver is not weaker production, but a sharp increase in domestic consumption, particularly from the biodiesel sector.

With the B50 mandate set to roll out in the second half of 2026, demand for palm oil as a biofuel feedstock is expected to reach approximately 15 million tons, up by about 2 million tons year-on-year. This expansion will divert a significant portion of supply away from export markets.

As a result, Indonesia is transitioning from an export-oriented model toward prioritizing energy security and value-added domestic use. In the short term, this shift is likely to support global palm oil prices. Over the longer term, it may reshape global vegetable oil trade flows and tighten competition for alternative feedstocks such as used cooking oil (UCO).