Indonesia's Crude Palm Oil Prices Set to Soar Amid Biodiesel Demand

The Indonesian palm oil market is expected to see significant price fluctuations in the coming years due to increased demand for biodiesel. According to Palm Oil Commodity Outlook 2026, crude palm oil prices could range from $959 to $1,172 per ton by 2026. This projection is based on three different scenarios.

The key factor driving up prices is Indonesia's B40 biodiesel program, which requires a 40% share of biodiesel in the fuel blend. The increased use of palm oil for fuel production has led to additional domestic demand and reduced the volume of feedstock available for other uses and exports.

Between 2020 and 2024, Indonesia's palm oil consumption for biodiesel production grew by an average of 12.2% annually. By 2025, the country had installed biodiesel production capacity of 19.15 million kiloliters, supported by 26 production facilities.

The overall domestic consumption and palm oil exports remain significant. In January-July 2025, domestic consumption reached 14.3 million tons, up 6.57%, while exports increased by 11.1% to 19.2 million tons.