- Export Shift: Indonesia plans to curb crude palm oil exports to prioritize domestic biofuel (B40/B50) and aviation fuel production.
- Investment Push: Government targets $36.86 billion in palm oil processing investments despite stagnant output over the past five years.
- Tighter Global Supply: Rising domestic use may reduce export availability, supporting global vegetable oil prices.
- Black Sea Support: Potential demand shift toward Black Sea sunflower oil, especially in Asia and the Middle East.
- Trade Resilience: 2025 palm oil exports still grew 9% in volume and 22% in value to $24.42 billion.
Indonesia’s Palm Oil Export Strategy
Indonesia, the world’s largest palm oil producer, is redirecting a greater share of crude palm oil (CPO) towards domestic energy needs. President Prabowo Subianto has confirmed that palm oil will be prioritized for biodiesel (B40, with a roadmap to B50) and palm-based aviation fuel, reinforcing its status as a strategic raw material for higher value-added energy products.
This policy is part of a broader push to enhance energy independence and lower internal fuel costs by expanding biofuel usage in transport and aviation. The shift marks a structural change in how Indonesia balances export revenues against domestic energy security.
Investment and Production Dynamics
The government aims to attract $36.86 billion in investment into palm oil processing, with a focus on downstream facilities tied to biodiesel and aviation fuel. This capital is intended to deepen value addition within Indonesia rather than exporting primarily raw or minimally processed products.
However, sector representatives highlight a key constraint: palm oil production has been largely stagnant for the past five years. According to Gapki’s Chairman, Eddy Martono, without new productivity gains or area expansion, additional biofuel demand will be met by diverting supplies away from exports rather than from incremental output growth.
Export Performance and Trade Impact
Despite the policy shift toward domestic use, palm oil remains a crucial foreign exchange earner for Indonesia. Data from the Central Statistics Agency (BPS) shows that in 2025 palm oil and derivative exports maintained strong performance, both in volume and value terms.
| Indicator (2025) | Value | Year-on-Year Change |
|---|---|---|
| Palm oil & derivatives export volume | 23.61 million tonnes | +9% |
| Palm oil & derivatives export value | $24.42 billion | +22% |
| Targeted palm oil processing investment | $36.86 billion | N/A (policy target) |
The faster growth in export value versus volume suggests firmer pricing and a supportive global demand backdrop, even as Indonesia prepares to gradually tighten export availability through higher domestic offtake for biofuels.
Implications for Global Vegetable Oil Markets
Reduced Indonesian CPO availability for export is likely to tighten global vegetable oil balances, particularly if production growth continues to lag. Importers with high dependence on palm oil may be forced to diversify, increasing their exposure to alternative oils such as sunflower, soybean, and rapeseed oil.
This structural tightening could underpin higher price floors across the vegetable oil complex. Countries in Asia, the Middle East, and North Africa that rely on competitively priced Indonesian palm oil may face higher procurement costs and increased competition for alternative oils.
Black Sea Sunflower Oil and Freight Market Outlook
For Black Sea exporters, the Indonesian pivot is broadly supportive. Ukrainian and Russian sunflower oil may capture additional market share in regions that must partially substitute away from palm oil. Competitive pricing, quality, and flexible logistics from Black Sea ports will be key differentiators.
From a shipping perspective, any sustained increase in Black Sea vegetable oil exports would lift freight demand on relevant routes to Asia, the Middle East, and North Africa. This could support freight rates for liquid bulk carriers and influence port logistics as flows rebalance away from Southeast Asia toward the Black Sea.
Source: Market Data
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