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Indonesia palm oil export curbs biodiesel plans to hit world vegetable oil supplies

Updated Jan 13, 2023
SINGAPORE/JAKARTA (Jan 13): A move by top palm oil exporter Indonesia to restrict shipments and boost domestic biodiesel consumption is set to squeeze global vegetable oil supplies already undercut by lower output in Southeast Asia and Latin America. Edible oil buyers, including price-sensitive consumers in South Asia and Africa, will bear the brunt of the supply-side constraints that come just as demand is forecast to climb, with China easing Covid-19 controls and India boosting purchases.
Indonesia's export restrictions and higher use of crops for making biofuels are another challenge to food-importing countries hurting from last year's red-hot inflation, which pushed prices of key staples such as wheat, corn and soybeans to all-time or multi-year highs. "The implementation of [the] B35 mandate in Indonesia in 2023 definitely changes [the] global palm oil SND (supply and demand) situation in 2023," said Oscar Tjakra, a senior analyst at food and agribusiness research at Rabobank. "I'm now expecting global palm oil SND will be in a slight deficit." Indonesia's B35 mandate, the highest in the world, stipulates diesel sold in the country from Feb 1 has to contain 35% palm-based fatty acid methyl ester. In comparison, Malaysia has partially implemented a 20% biodiesel blending mandate and other countries have measures calling for single and double digit percentages of bio content for diesel or gasoline. The Indonesia Biofuel Producers Association says the B35 mandate ...
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