USDA Cuts Indonesia Palm Oil Output Forecast by 2.2 Million Tonnes

Jakarta — The United States Department of Agriculture (USDA) has cut its forecast for Indonesia’s palm oil production in marketing year 2026/27 by 2.2 million tonnes, from 47.2 million tonnes to 45 million tonnes. In its October reports released on 9 October 2026, USDA also reduced Indonesia’s projected exports by 1.9 million tonnes, from 23.5 million tonnes to 21.6 million tonnes.

The adjustment is the largest change in USDA’s palm oil table this month. As Indonesia is the world’s biggest producer and exporter, the revision also lowered forecasts for global vegetable oil supply, trade and stocks. USDA figures are marketing-year projections and should not be read as Indonesia’s monthly industry realisation.

Indonesia drives the production and export revisions

USDA’s Oilseeds: World Markets and Trade report shows global palm oil production in 2026/27 falling from a September forecast of 81.121 million tonnes to 78.921 million tonnes in October. The entire net decline of 2.2 million tonnes came from Indonesia, while Malaysia’s production forecast was unchanged at 19.6 million tonnes.

USDA attributed the lower Indonesian export projection to reduced production. Global palm oil exports were cut from 45.261 million tonnes to 43.747 million tonnes. Indonesia’s 1.9-million-tonne reduction was only partly offset by increases of 300,000 tonnes for Malaysia and 125,000 tonnes for Guatemala.

• Indonesia production: 47.2 million tonnes to 45 million tonnes.
• Indonesia exports: 23.5 million tonnes to 21.6 million tonnes.
• Indonesia ending stocks: 4.066 million tonnes to 3.766 million tonnes.
• Indonesia domestic consumption: unchanged at 23.725 million tonnes.

Among importing countries, USDA lowered India’s forecast from 8.7 million tonnes to 8.4 million tonnes, China’s from 3.9 million tonnes to 3.7 million tonnes, Bangladesh’s from 1.725 million tonnes to 1.4 million tonnes, and Vietnam’s from 1.175 million tonnes to 940,000 tonnes. USDA linked several of these revisions to reduced trade with Indonesia.

Global vegetable oil supplies also decline

In the October World Agricultural Supply and Demand Estimates, USDA reduced its 2026/27 global vegetable oil production forecast from 245.36 million tonnes to 243.16 million tonnes. Trade was cut from 92.13 million tonnes to 90.76 million tonnes, total use from 238.58 million tonnes to 237.31 million tonnes, and ending stocks from 30.80 million tonnes to 29.92 million tonnes.

For palm oil alone, global ending stocks are projected at 13.697 million tonnes, 775,000 tonnes below the September forecast. USDA said the lower global vegetable oil carryout mainly reflected reduced palm oil stocks in Indonesia and India.

The same report nevertheless said Indonesian and Malaysian palm oil export prices had fallen sharply before the WASDE release. USDA linked the decline to abundant stocks, strong monthly Malaysian production and weaker petroleum prices. The tighter 2026/27 balance therefore does not automatically imply an immediate price increase, as the market is also responding to near-term stocks and output.

What it means for Indonesia

For Indonesia, the combination of lower production, reduced exports, unchanged domestic consumption and smaller ending stocks points to a tighter supply balance in USDA’s outlook. This matters as domestic feedstock demand increases under the country’s biodiesel mandate, although USDA did not identify the B50 programme as the cause of its production revision.

As an analysis, lower projected exports could restrict volumes available to the global market if domestic consumption remains at 23.725 million tonnes. The effects on CPO prices, fresh fruit bunch prices and B50 implementation will still depend on Indonesia’s realised production, GAPKI’s monthly stocks, importer demand and energy prices.

USDA also cautions that its stock figures combine different local marketing years and should not be interpreted as a snapshot of global stocks on one common date. The October projections may change again as new crop, trade and consumption information becomes available.