Limited Growth Expected in Indonesian Palm Oil Production

13-Mar-2026 03:25 PM

Jakarta – A report by the Indonesian Palm Oil Association (GAPKI) indicates that Indonesia’s domestic production of crude palm oil (CPO) reached a new record in 2025, rising 7.3% to 31.66 million tonnes compared with 2024. However, strong domestic consumption and export demand led to a 25% decline in year-end palm oil stocks, which fell to 2.07 million tonnes, even lower than stocks in Malaysia.

It is noteworthy that Indonesia is the world’s largest producer and exporter of palm oil. A large volume of palm oil is also consumed domestically, particularly for biodiesel production, which limits the amount of carryover stocks available.

According to GAPKI, although Indonesian producers are keen to increase palm oil output, dry weather conditions and regulatory challenges are likely to restrict production growth. Even if production increases, the growth may remain limited to around 1–2%, and in any case it is unlikely to exceed 5%.

The Indonesian government is also planning to implement a B50 biodiesel program, which would mandate 50% palm oil blending in biofuel during the current year. GAPKI noted that if this rule is implemented, the availability of palm oil for export could become limited in Indonesia.