Indonesia's December 2024 CPO Benchmark Rises as B40 Demand Looms

Jakarta — As 2024 draws to a close, Indonesia's trade ministry has set the December crude palm oil (CPO) reference price at US$1,071.67 per tonne, up 11.40% from November. The energy ministry is meanwhile preparing a 40% palm-based biodiesel blend, B40, for 1 January 2025 and estimates annual biodiesel requirements of 15.6 million kilolitres. These developments coincide, but the available statements do not establish that B40 caused the December reference-price increase.

A monthly export benchmark, not a daily cash price

In its 3 December statement, the Ministry of Trade said the reference price had risen by US$109.70 per tonne from November's US$961.97. The benchmark helps determine export duty and the palm-oil export levy. It is not the daily tender price for CPO, nor the price paid to every mill or grower. Readers comparing daily palm-oil prices should keep those separate measures in view.

The ministry calculated its benchmark from average prices recorded between 25 October and 24 November 2024: US$1,019.97 per tonne on the Indonesian CPO exchange, US$1,123.37 on Malaysia's exchange and US$1,279.33 in the Rotterdam auction market. Under its stated methodology, the spread between the three led it to use the Indonesian and Malaysian averages, the two values closest to the median. That produced the December reference price of US$1,071.67 per tonne.

For December, the ministry also listed a CPO export duty of US$178 per tonne and an export levy equal to 7.5% of the reference price, or US$80.3752 per tonne. These are separate policy measures. None of the figures directly describes a change in the farmgate price of fresh fruit bunches.

What the ministry attributed the rise to

Trade official Isy Karim attributed the higher reference price to stronger demand, particularly from India, Europe and North America, against global production that had not kept pace. He also cited lower output, Thailand's temporary suspension of CPO exports, higher domestic consumption in Malaysia and a weaker ringgit.

His explanation did not identify Indonesia's B40 decision as the sole cause of the December benchmark's rise. Moreover, the pricing observation period used for the benchmark ended on 24 November. Placing a December export benchmark alongside a coming biodiesel programme cannot, on its own, establish a causal relationship between them.

A larger domestic biodiesel requirement lies ahead

In a statement on 28 December, Deputy Minister of Energy and Mineral Resources Yuliot Tanjung said a decision on B40 implementation had been made and that officials were checking the readiness of the fatty acid methyl ester (FAME) industry in Dumai. The ministry estimated that nationwide B40 would require about 15.6 million kilolitres of biodiesel annually. This is an estimate for the forthcoming programme, not an actual figure for CPO consumption in 2024.

Under B40, biodiesel derived from palm oil will make up 40% of the diesel blend. The ministry said supply of feedstock was only one consideration: geography, facilities and distribution also mattered. Pertamina described its production and blending preparations for the intended 1 January start.

The two indicators therefore tell different stories at year-end. December's reference price is an export-policy benchmark already in force; the B40 requirement points to potential domestic demand in the following year. Actual distribution and CPO supply will be needed to assess the programme's market effects. See the biodiesel mandate data for the policy timeline.