IPOSS Projects Indonesia’s Domestic Palm Oil Use to Exceed Exports in 2026

Jakarta — Indonesia Palm Oil Strategic Studies (IPOSS) projects Indonesia’s domestic palm oil consumption to reach about 27.1 million tonnes in 2026, surpassing exports, which are forecast to fall to 25.76 million tonnes. The shift is mainly linked to higher biodiesel feedstock demand following the introduction of B50 in July, while national output is expected to record only modest growth.

The figures come from the IPOSS Q4 2026 Indonesian Palm Oil Industry Outlook, titled Maintaining Room for Growth amid a New Balance, issued on 14 October 2026. As these are research-house projections, the production, consumption, export and inventory figures are not final full-year results.

Domestic consumption forecast to rise 7.4%

IPOSS expects domestic consumption to increase 7.4% to 27.1 million tonnes, representing 51.3% of total national palm oil use. Exports are projected to account for 48.7%, meaning domestic use would exceed overseas shipments for the first time in an annual IPOSS projection.

National palm oil output in 2026 is forecast at 52.4 million tonnes, just 1.86% higher than in 2025. Palm product exports are projected to decline 15.4% to 25.76 million tonnes. In the fourth quarter alone, exports are forecast at 4.9 million tonnes, down 37.2% from the same period a year earlier.

IPOSS director Nanang Hendarsah said the issue was not a choice between biodiesel and exports. Both are important for Indonesia, he said, making production growth necessary to keep pace with domestic demand so that stronger energy security does not continually reduce export capacity.

B50 tightens competition for palm oil supply

IPOSS primarily associates the rise in domestic demand with additional feedstock needed for the B50 programme. Blending 50% palm-based biodiesel into diesel strengthens the connection between energy policy, crude palm oil supply, exports and the funding of palm-sector programmes. Indonesia’s policy trajectory is available on the biodiesel mandate data page.

IPOSS warned that lower export volumes could affect export-levy revenue, although the final proceeds would also depend on prices and applicable levy rates. The funds support programmes including biodiesel incentives and smallholder replanting. Policies that raise domestic absorption therefore also need to take their financing base into account.

National palm oil inventories are projected to touch about 300,000 tonnes in October before recovering to around 1.7 million tonnes at the end of December. IPOSS said the recovery should not automatically be read as a broad easing of supply because it would also be supported by lower exports.

Productivity and smallholder replanting provide support

Fourth-quarter production is forecast to rise 15.6% from the previous quarter to 13.3 million tonnes. IPOSS stressed that the increase would mostly reflect a shift in output between quarters rather than a structural recovery in production capacity.

The institute therefore called for stronger productivity without relying on plantation expansion. Smallholder replanting areas that have entered their productive phase could contribute about 0.94 million tonnes of crude palm oil in 2026, equivalent to roughly 2% of national CPO production. The impact is beginning to emerge, but faster implementation still requires stronger farmer institutions, better assistance, and improvements to proposal and verification processes.

For market participants, the IPOSS outlook shows that B50 cannot be assessed solely through biodiesel volumes. Plantation output, replanting progress, CPO prices, exports, inventories and levy revenue need to be monitored together. Readers can follow market updates on the CPO price page and consult the smallholder replanting funding guide.