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The United States Department of Agriculture (USDA) has revised its 2021/22 forecast for Indonesia’s palm oil exports down to 25.5M tonnes due to restrictive export policies and weaker global demand.

Shipments started to decline in February and reached a low of 183,000 tonnes in May, according to the USDA’s 4 August Foreign Agricultural Service (FAS) report.

Exports to the People’s Republic of China (PRC) dropped in 2021/22 due to COVID-related restrictions and lockdowns reducing food service demand for vegetable oils.

Shipments to the PRC reached 1.3M tonnes during the first eight months of 2021/22, according to the Global Agricultural Information Network (GAIN) report, 59% lower than the same period the previous year.

The USDA forecast 2022/23 exports at 29.5M tonnes, an increase of 4M tonnes compared to the previous year, due to expected demand recovery from major markets such as India and the PRC.

Indonesia’s 2022/23 palm oil production forecast remained unchanged at 46M tonnes, the report said, while the USDA had reduced its 2021/22 production estimate slightly to 45.3M tonnes due to a reduction of processed palm fruit.

Palm oil consumption in 2022/23 was estimated by the USDA at 16.9M tonnes, an increase of 3% compared to the previous year due to higher demand from the biodiesel industry and the food sector.

The USDA updated its estimates for both 2021/22 and 2022/23 palm oil use in the biodiesel industry due to an expected slight increase in biodiesel production for export markets and fuel use in the transportation sector.

Indonesia’s biodiesel mandate programme continues to be the main driver, with a 30% blending rate remaining in place, according to the report.

The government’s plan to raise the biodiesel blending mandate to 40% (B40) had entered the road test phase in July and was expected to be implemented in 2025, the report said.

In the food sector, the USDA forecast palm oil use would rise by 4% to 6.6M tonnes in 2022/23 from 6.4M tonnes the previous year in line with population growth and improved economic performance.