B50 Delay Adds to Pressure on Palm Oil Prices

The postponement of Indonesia’s B50 biodiesel blending mandate has weighed on palm oil prices, dampening expectations for near-term demand growth from the energy sector. The policy was widely viewed as a key driver that could absorb additional palm oil supply, and any delay has prompted the market to reassess consumption prospects. As a result, the anticipated demand boost has been pushed further out, weakening short-term sentiment.

On the supply side, palm oil production in Southeast Asia is entering a seasonal recovery phase. Output has improved in major producing countries, leading to a gradual build-up in inventories. Higher stocks, combined with slower policy-driven demand, have intensified downward pressure on prices. Export performance, while stable, has not been strong enough to fully offset the increase in supply.

Meanwhile, competition from other vegetable oils has added another layer of pressure. Relatively soft prices for soybean oil and rapeseed oil have encouraged substitution, limiting palm oil’s pricing power in global markets. Volatility in crude oil prices has also affected the economics of biodiesel, reducing investor appetite for bullish positions in palm oil futures.

Overall, the delay in B50 implementation has postponed a critical demand catalyst at a time when supply is rising. Until clearer signals emerge on policy timing, export recovery, and inventory drawdowns, palm oil prices are likely to remain under pressure and trade within a cautious, range-bound pattern.