Domestic crude palm oil consumption in Indonesia will exceed exports in 2026 for the first time, according to projections from Indonesia Palm Oil Strategic Studies (IPOSS). Domestic use is set to account for 51.3 percent of total national palm oil use, while exports will take 48.7 percent.
Biodiesel drives domestic demand
Domestic demand is rising because of the B50 biodiesel mandate, which has been in force since July 2026. IPOSS projects domestic consumption will grow 7.4 percent this year, to 27.1 million tons.
Production is not keeping pace. IPOSS expects national output of 52.4 million tons, an increase of just 1.86 percent on 2025.
Exports under pressure
Palm oil product exports are forecast to fall 15.4 percent in 2026, to 25.76 million tons. The slide is steeper late in the year: exports in the fourth quarter are projected at 4.9 million tons, down 37.2 percent on the same period a year earlier.
Export revenue feeds the Export Levy, which funds the biodiesel and PSR replanting programmes. Lower volumes could weigh on levy receipts, although receipts also depend on prices and levy policy.
Balancing energy and exports
Nanang Hendarsah, director of IPOSS, said the choice is not between biodiesel and exports. “Both are important for Indonesia,” he said. The challenge is ensuring production can keep pace with domestic demand, so that energy security does not continuously narrow export room.
Hendarsah warned that output has not grown as fast as demand. “Without productivity breakthroughs, balancing energy, export and industry financing interests will become increasingly challenging,” he said.
Source: Indonesia Palm Oil Strategic Studies (IPOSS)
