Indonesia is forecast to consume over 8M tonnes of palm oil this year to meet domestic demand for biodiesel, which may hit volumes available for export, the Jakarta Globe reported on 4 February.
"Domestic demand for palm oil in 2020 is estimated to reach 8.3M tonnes to be processed into biodiesel, which may reduce heavily the amount of palm oil available for export," Indonesian Palm Oil Association (Gapki) executive director Mukti Sardjono said.
In January, the government began the mandatory use of B30 (comprising 30% palm biofuel and 70% diesel) and was also aiming to increase this to B40 next year, the Jakarta Globe wrote.
Gapki said expected favourable weather could boost the country’s palm oil output this year.
Indonesia's crude palm oil (CPO) and palm kernel oil (PKO) production hit a record 51.8M tonnes last year, up 9.1% from 2018, despite a long drought.
CPO production rose 9.4% to 47.2M tonnes and PKO production increased 8.6% to 4.6M tonnes in 2019 compared to 2018, Gapki figures showed.
The country exported 36.2M tonnes of palm oil last year, a rise of 4%, despite the adverse effects of the United States-China trade war, Indian tariffs and the European Union's palm biodiesel ban.
"The US-China trade war put a strain on the former's soyabean exports. US farmers who used to ship large quantities to China were forced to find new markets, putting huge pressures on the prices of oilseed and vegetable oils," Mukti said.
As a result, CPO prices on the global market had been under pressure since the first half of last year. Gapki estimated the export value of palm oil products, including oleochemicals and biodiesel, had declined to US$19bn last year, down 17% from US$23bn in 2018.
The decline in export value could have been more severe but CPO prices recovered after President Joko Widodo announced that Indonesia would increase domestic use of CPO for biodiesel, the Jakarta Globe said.