Indonesia unlikely to back down on B40 biodiesel mandate, helping sustain elevated palm oil prices, says RHB

Indonesia will likely charge ahead with its biodiesel mandate, which will keep palm oil prices elevated this year as supply in the market shrinks, said RHB Research. The government appears “determined” to roll out its B40 programme that requires a mix of 40% palm oil with 60% diesel, the research house said, following a meeting with the Indonesia Biofuel Producer Association. The mandate is expected to be implemented as soon as this month. As supply tightens, with Indonesian palm oil exports expected to decline by 7% in 2025, “we believe this will continue to support CPO (crude palm oil) prices at higher levels in 2025,” RHB Research said. The house kept the plantation sector on a “overweight” call, noting that its average 2025 CPO price per tonne forecast of RM4,300 is “conservative”, considering the year-to-date prices of around RM4,720. Indonesia’s implementation of B40 is closely watched, as the programme is expected to soak up rising supply from the world’s biggest palm ...