The demand for palm oil in Indonesia will increase and the production will decrease by 2024.

An industry official said on Thursday that Indonesian palm oil exports will decline by 2024 because of increased domestic consumption due to a higher biodiesel blend mandate and a small decrease in production.

Exports would be limited and benchmark Malaysian prices supported by a lower production in the world's largest producer of tropical oil.

Fadhil hasan, the head of the trade division of the Indonesian Palm Oil Association, said at the Globoil Conference that the country's exports may fall by 2,000,000 metric tons compared to a year earlier, and could reach 30.2,000,000 tons in 2024.

He said that exports in the first half of this year were down 7.6% compared to a year earlier, at 15.06 million tonnes.

He said that the dry weather of last year is reducing yields.

"Neither productivity nor area has increased this year." Hasan stated that we expect this year's production to be reduced by 1,000,000 tons.

Indonesia will increase the percentage of palm oil in biodiesel from 35% to 35% by 2023, and implement it across the country starting August 1, 2023.

He said that palm oil consumption would reach a record of 24.2 million tonnes in 2024, up from 23.2 millions tons last year.

Last month, the country's Energy Ministry announced that it would increase the blend to 40% by January 2025 in order to reduce fuel imports as well as emissions from fossil fuels.

Hasan explained that the rising demand will reduce the surplus of biodiesel for exports and help Jakarta to raise funds for its biodiesel program.

The government should consider carefully trends in production, and exports, before increasing the blend mandate. Exports provide revenue to support the biodiesel programme," he stated. (Reporting and editing by Varun H. K.; Reporting by Rajendra J.)

(source: Reuters)