El Niño Threatens Indonesian Palm Oil Exports, Production

The Indonesian Palm Oil Producers Association (GAPKI) has warned that a severe El Niño could significantly impact palm oil production, potentially reducing crude palm oil (CPO) output by up to 5 million tonnes. According to GAPKI chairman Eddy Martono, the effects of a severe El Niño on palm oil production could be felt as early as next year.

The association has projected that extreme El Niño conditions could lead to reduced CPO output, with a potential decrease of 15% in national CPO production. This would result in lower export volumes for Indonesian palm oil producers.

In addition to the impact on exports, the rollout of a mandatory increase in palm-based biodiesel to a 50% blend from 40% is expected to increase domestic CPO absorption and reduce CPO supply for export markets. However, Eddy stressed that ensuring palm oil supply for domestic use remained the top priority.

With national CPO output projected to reach around 53 million tonnes in 2026, producers expect there will be enough supply to fulfill the higher domestic demand for fuel.