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2026-07-15 20:00:13
[Indonesia's B50 Biodiesel Mandatory Order Reshapes Global Palm Oil Trade Flows; Malaysia Expected to Absorb Spillover Demand] ⑴ Indonesia officially implemented its B50 biodiesel mandatory order on July 1st, requiring 50% palm oil-based biodiesel to be blended into diesel fuel, a further upgrade from the previous B40 standard. This is expected to consume an additional 3 million tons of palm oil annually. ⑵ The Malaysian Palm Oil Council points out that this policy will push Indonesia's total domestic palm oil consumption to approximately 26 million tons, equivalent to more than half of its annual production, while the export share will be reduced from approximately 68% in 2019 to approximately 48%. ⑶ This structural shift is already reflected in global trade data. Palm oil's share of global edible oil trade has decreased from approximately 56% in 2019 to approximately 49% in 2025. As the world's second-largest producer, Malaysia is expected to be a major beneficiary for importers seeking alternative supplies. ⑷ However, the actual extent of the benefit depends on multiple factors, including the supply and price trends of competing vegetable oils, particularly soybean oil, and the suppression of price elasticity by inventory levels in major importing countries. (5) The agency expects crude palm oil prices to trade between 4,300 and 4,700 ringgit per ton in the second half of 2026, supported by tight supply in Indonesia and rising El Niño risks. However, high inventory levels in the Chinese and Indian markets and the weakening economics of biodiesel (gas diesel prices are lower than palm oil prices) may limit upside potential.
